154.25.030 Jobs retention project agreement -- Requirements, limitations, and permitted inducements.
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<![CDATA[ Page 1 of 4 154.25-030 Jobs retention project agreement -- Requirements, limitations, and permitted inducements. (1) The authority, upon adoption of its final approval, may enter into, with any approved company, an agreement with respect to the jobs retention project. The <br>terms and provisions of each agreement, including the amount of approved costs, <br>the amount of the inducement, the job maintenance requirement, and any limitations the authority may deem necessary, shall be determined by negotiations between the <br>authority and the approved company, except that each agreement shall include the <br>following provisions: <br>(a) The amount the approved company may recover through inducements under this subchapter for the initial project, which shall be a negotiated percentage <br>not to exceed fifty percent (50%) of approved costs. However, the authority <br>may negotiate an increase in the percentage such that both the initial project <br>and the supplemental project are eligible for seventy-five percent (75%) of <br>approved costs upon approval of a supplemental project. The adjustment to <br>the initial project shall be made on the total approved costs and any credits <br>taken prior to the supplemental project shall then be subtracted from that <br>increased amount of approved costs. Neither the initial project nor the <br>supplemental project shall ever be eligible for inducements greater than <br>seventy-five percent (75%) of the approved costs. The authority shall <br>negotiate a maximum allowable inducement for each year of the agreement, <br>and the approved company may not recover inducements above that <br>maximum in any year during the term of the agreement, except that the annual <br>maximum allowable inducement may be exceeded if a carry-forward of <br>unused inducements from previous years exists. Any carry-forward of unused <br>inducements will lapse upon maturity or termination of the agreement; (b) A provision that sets the activation date for the initial project within three (3) years of the final approval. Prior to the activation date, the authority may <br>extend the time for the completion of the jobs retention project and <br>compliance with the required investment upon request of the approved <br>company for good cause; however, the ten (10) year period for the term of the <br>agreement shall begin from the activation date. No inducements from the jobs <br>retention project shall be available, other than the transferred credits provided <br>for under subsection (2) of this section, until activation. Upon activation, the <br>balance of transferred credits shall expire; (c) A provision that states that within three (3) months of the completion of the jobs retention project, the approved company shall document the actual cost of <br>the project in a manner acceptable to the authority. The authority may employ <br>an independent consultant or utilize technical resources to verify the cost of <br>the project. The approved company shall reimburse the authority for the cost <br>of the consultant; (d) A provision that establishes a minimum required number of full-time jobs that must be maintained at the site of the jobs retention project and filled with <br>residents of the Commonwealth subject to Kentucky income tax and states Page 2 of 4 that the authorized inducements may be suspended at the discretion of the <br>authority from the date of noncompliance until the date compliance is <br>reestablished if the approved company's employment falls below the <br>established minimum employment requirement. If the company does not <br>increase the number of full-time employees at the site who are residents of the <br>Commonwealth and subject to Kentucky income tax sufficiently to meet the <br>minimum employment requirement within one (1) year from the date of the <br>initial suspension, the remaining unused inducements may be terminated at <br>the discretion of the authority; (e) A provision that gives the authority discretion to suspend or terminate the authorized inducements for any failure to comply with the terms of the <br>agreement; and (f) A provision that provides the term shall not be longer than the earlier of: 1. The date on which the approved company has received inducements or <br>withheld assessments equal to the amount that the company may recover <br>under paragraph (a) of this subsection; or 2. Ten (10) years from the activation date. However, the term may be extended to a period longer than ten (10) years <br>upon the addition of a supplemental project as negotiated and approved by the <br>authority. (2) In consideration of the execution of the agreement, during the time the agreement is in effect, which time shall commence on the date of the agreement, the approved <br>company may be permitted the following inducements: <br>(a) Beginning on the effective date of the jobs retention agreement, which shall <br>also be the date of final approval, if the approved company has a balance of <br>unused approved costs on a previously existing and active incentive <br>agreement approved by the authority pursuant to Subchapter 24 or 28 of KRS <br>Chapter 154, the approved company may impose wage assessments on <br>employees whose jobs are at the facility where the project defined in the <br>previously existing incentive agreement was located. The wage assessments <br>may be imposed as provided in KRS 154.25-040, and shall be available in an <br>amount up to the balance of transferred credits from the previously existing <br>project. <br>1. The transferred credits shall only be available to the approved company <br>until the activation date, the term from the original incentive agreement <br>expires, or the balance of transferred credits is exhausted, whichever <br>occurs first; and 2. Should the approved company exercise this option, the incentive <br>agreement from which the credits were transferred shall be terminated <br>upon transfer and all parties shall be released from their obligations <br>thereunder. (b) After the activation date: Page 3 of 4 1. A one hundred percent (100%) credit against the taxes imposed by KRS <br>141.020, 141.040, and 141.0401 that would otherwise be owed by the <br>approved company, in the approved company's taxable year, as <br>determined under KRS 141.402, on the taxable income, Kentucky gross <br>receipts, or Kentucky gross profits of the approved company generated <br>by or arising from the jobs retention project. The ordering of credits <br>shall be as provided in KRS 141.0205; 2. The aggregate assessment withheld by the approved company as <br>provided in KRS 154.25-040 in each year after the activation date; (c) 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 <br>recover under subsection (1)(a) of this section that has not yet been recovered, <br>reduced by any recovery through the collection of assessments subject to the <br>annual maximum inducements authorized pursuant to subsection (1)(a) of this <br>section. The credit shall be allowed for each taxable year of the approved <br>company during the term of the agreement and for which a tax return of the <br>approved company is filed until the amount that the company may recover <br>under subsection(1)(a) of this section has been received through a <br>combination of credits and assessments, if the company elects to impose <br>assessments. The approved company shall not be required to pay estimated tax <br>payments as prescribed under KRS 141.044 or 141.305 on income, Kentucky <br>gross profits, or Kentucky gross receipts from the jobs retention project. One <br>hundred eighty (180) days after the filing of the tax return of the approved <br>company, the Department of Revenue shall certify to the authority the state <br>tax liability for the preceding taxable year of the approved company and the <br>amount of any tax credits taken pursuant to this section; (d) Prior to execution of the agreement, the eligible company shall secure from all local governmental authorities responsible for collecting local occupational <br>license fees a resolution or order of the local governmental entities <br>acknowledging and consenting to the termination or partial termination of the <br>receipt of local occupational license fees on wages subject to the agreement <br>paid by the approved company on behalf of its employees to the local <br>government entities; (e) If more than one (1) local occupational license fee is imposed upon the employees of the approved company, the assessment imposed upon the <br>employees shall be credited against the local occupational license fee and shall <br>be apportioned to each local occupational license fee according to each local <br>occupational license fee's proportion to the total of all local occupational <br>license fees for such employees. No credit or portion thereof shall be allowed <br>against any local occupational license fee imposed by or dedicated solely to a <br>local board of education; and (f) If, in any taxable year of the approved company during which the agreement is in effect, the assessment collected from the wages of the employees exceeds <br>the expended portion of the amount that the approved company may recover Page 4 of 4 under paragraph (a) of this subsection, or exceeds the annual maximum <br>negotiated by the authority, the assessment collected from the wages of the <br>employees shall cease for the remainder of that taxable year of the approved <br>company. The approved company shall resume normal personal income tax <br>and occupational license fee withholdings from the employees' wages for the <br>remainder of that taxable year, and the approved company shall remit to the <br>Commonwealth and applicable local jurisdictions their respective shares of <br>the excess assessment collected on the withholding filing date for employees' <br>wages next succeeding the first date when the approved company collected <br>excess assessments. (3) The jobs retention agreement and inducements available pursuant thereto shall not be transferable or assignable by the approved company without the expressed <br>written consent of the authority. Effective: March 23, 2007 <br>History: Created 2007 Ky. Acts ch. 91, sec. 3, effective March 23, 2007. <br>Legislative Research Commission Note (3/23/2007) Although subsection (1)(b) of 2007 Ky. Acts ch. 91, sec. 3 refers to "transferred credits provided for under Section <br>3 of this Act, "it appears from context and on advice of the drafter that the reference <br>should have been to "transferred credits provided for under subsection (2) of this <br>section." The Reviser of Statutes has made this change pursuant to KRS 7.136. ]]>