HB 1010 -- Tax Credit Responsibility Act of 2001

Co-Sponsors:  Rizzo, Hoppe, Scheve

This bill's purpose is to:

(1)  Promote the responsible use of incentives for the continued
economic development of the state;

(2)  Ensure that the state's economic development resources are
distributed to programs producing the greatest benefit for
Missourians;

(3)  Achieve a system of incentives to ensure that economic
development programs position Missouri businesses competitively
in the global economy;

(4)  Reform the current incentives by repealing programs that
are ineffective, duplicates of other programs, or that have
goals and objectives that are unclear, ambiguous, or
inconsistent;

(5)  Ensure fiscal responsibility by adjusting the cost of
certain programs, capping the cost of others, and providing full
cost-benefits reports; and

(6)  Provide adequate legal recourse against those companies and
citizens who do not meet the requirements of their negotiated
incentive agreements.

In its main provisions, the bill:

(1)  Requires the Department of Economic Development to submit,
by November 1 of each year, an annual tax credit allocation plan;

TAX CREDITS FOR NEW OR EXPANDED BUSINESS FACILITIES

(2)  States that for all revenue producing enterprises relating
to tax credits for a new or expanded business who begin
operating prior to January 1, 2002, the right to receive tax
credits for a new or expanded business facility will vest in the
taxpayer when operations begin at the revenue producing
enterprise;

(3)  Limits tax credits for new or expanded businesses operating
on or after January 1, 2002, to no more than $4 million in any
year;

(4)  Expands the definition of "revenue producing enterprise,"
as it relates to tax credit for a new or expanded business
facility, to include local exchange telecommunications services
and certain industries determined by the Director of the
Department of Economic Development;

TAX CREDITS FOR ENTERPRISE ZONES

(5)  Expands the definition of "revenue producing enterprise,"
as it relates to enterprise zones, to include local exchange
telecommunications services, photofinishing laboratory
activities and microfilm recording and developing services, and
certain industries as determined by the director;

(6)  Limits tax credits for taxpayers who begin operating on or
after January 1, 2002, to no more than $30 million in any year
for enterprise zones;

TAX CREDITS FOR BOTH NEW OR EXPANDED BUSINESS FACILITIES AND
ENTERPRISE ZONES

(7)  Requires a taxpayer who begins operating between January 1,
1999, and January 1, 2002, in order to be entitled to receive
tax credits associated with either the "New or Expanded Business
Facility" or "Enterprise Zone" programs, to have a letter of
intent approved by the director and to file its initial
application for claiming tax credits in the tax period
immediately following the one in which operations began at the
new business facility;

TAX CREDIT FOR INVESTMENT IN MISSOURI SMALL BUSINESSES

(8)  Expands the definition of a "community development
corporation," as it relates to investment in Missouri small
businesses, to include certain not-for-profit corporations;

(9)  Expands the definition of "Missouri small business" to
require that the business maintain for a specified time period
at least 80% of its employees;

(10)  Limits tax credits available for qualified investments in
Missouri small businesses to no more than $5 million annually,
half of which must be invested in Missouri small businesses in
distressed communities;

(11)  Requires tax credits to be used for 5 years after an
initial investment is made in a distressed community;

(12)  Limits single projects to no more than 20% of the tax
credits available each year for investments in community banks
or community development corporations for direct investment;

(13)  Allows the department to prorate either the revocation of
the tax credits or the repayment of any amount of the tax credit
already applied against the state tax liability when the
qualified investment made in a Missouri small business is
withdrawn prior to the end of the prescribed 5-year time period;

(14)  Allows the department to revoke a tax credit certificate
or require repayment of the tax credit liability already applied
against the investor's state liability if any portion of the
application proves false, if the application violates any
conditions stated on the certificate, or if the business fails
to comply with the employee retention requirements;

TAX CREDITS FOR INVESTMENTS OF CERTIFIED CAPITAL

(15)  Expands the definition of "certified capital" to
"certified capital investment" and adds that it is an investment
of cash in a Missouri certified capital company that fully funds
either the investor's equity interest in a certified capital
company or a qualified debt instrument issued by a certified
capital company;

(16)  Includes a definition for "qualified debt instrument" and
expands the definition of "qualified distribution," "qualified
investment," and "Missouri qualified business";

(17)  Requires the aggregate amount of certified capital for
which earned and vested credits against state premium liability
are allowed for calendar year 2002 to be set at an amount that
entitles all Missouri certified capital company investors to
take aggregate credits not to exceed $3 million for any year
with the cumulative amount of tax credits authorized for the
program limited to $170 million;

(18)  States specific requirements for a company to be certified;

(19)  States several requirements regarding certified capital
that is not required to be placed in qualified investments or
which has been placed in qualified investments and can now be
received by the company;

(20)  Requires all certified capital companies to submit a
report to the department for the period ending December 31 of
the prior calendar year;

(21)  Allows the department to audit the records of certified
capital companies, certified investors, and qualified Missouri
businesses that received qualified investments;

(22)  Requires the department to provide the Governor, the
Speaker of the House of Representatives, and the President Pro
Tempore of the Senate a report containing specific information
on certified capital companies by March 31 of each even-numbered
year, beginning with March 31, 2002;

TAX CREDITS FOR GRAPE AND WINE PRODUCERS

(23)  Limits the tax credits for grape and wine producers to $1
million annually;

MISSOURI TECHNOLOGY CORPORATION AND THE MISSOURI TECHNOLOGY
INVESTMENT FUND

(24)  Lists several specific activities that the Missouri
Technology Corporation may undertake;

(25)  Authorizes the Missouri Technology Corporation to
administer the Missouri Technology Investment Fund;

ABANDONED PROPERTY AND REDEVELOPMENT PROJECTS

(26)  Allows the director to grant a demolition tax credit for
up to 100% of the cost of demolition given certain circumstances;

(27)  Limits the number of years that remediation and demolition
tax credits can be carried over to 5;

(28)  Limits tax credits for abandoned property and
redevelopment projects to $30 million for any year;

TAX CREDITS FOR QUALIFIED RESEARCH EXPENSES

(29)  Defines the terms "corporation," "department," and
"director";

TAX CREDITS FOR TECHNOLOGY TRANSFER FEES AND APPLIED RESEARCH
FEES

(30)  Defines the terms "applied research," "corporation,"
"director," "eligible applied research fees," "eligible Missouri
business," "eligible technology transfer fees," "taxpayer,"
"technology transfer," and "university";

(31)  Allows the director to authorize tax credits in an amount
not to exceed 50% of the eligible technology transfer fees or
eligible applied research fees incurred by the business;

(32)  Allows these tax credits to be carried forward for 5 years
and to be transferred, sold, or assigned to a third party; and

(33)  Limits tax credits for technology transfer fees and
applied research fees to no more than $5 million in any given
year.

The following parts of the bill will be effective on January 1,
2002:

(1)  Tax credits for investment in Missouri small businesses;

(2)  Tax credits for investment in, or relocating a business to,
a distressed community; and

(3)  Tax credits relating to technology transfer fees and
applied research fees.

Missouri House of Representatives
Last Updated November 26, 2001 at 11:47 am