Arizona-2011-SB1041-Engrossed

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 20-224.03, Arizona Revised Statutes, as added by Laws 2011, second special session, chapter 1, section 10, is amended to read:

START_STATUTE20-224.03. Premium tax credit for new employment

A. A credit is allowed against the premium tax liability imposed pursuant to section 20‑224, 20‑837, 20‑1010, 20‑1060 or 20‑1097.07 for net increases in full‑time employees hired in qualified employment positions as certified by the Arizona commerce authority pursuant to section 41‑1525 41‑1521.� A tax credit is not allowed against the portion of the tax payable to the fire fighters' relief and pension fund pursuant to section 20‑224 or the portion of the tax payable to the public safety personnel retirement system pursuant to section 20‑224.01.

B. Subject to subsection E of this section, the amount of the tax credit is equal to three thousand dollars for each full‑time employee hired for the full taxable year in a qualified employment position in each of the first three years of employment, but not more than four hundred employees in any taxable year.

C. To qualify for a credit under this section, the insurer and the employment positions must meet the requirements prescribed by section 41‑1525 41-1521.

D. A credit is allowed for employment in the second and third year only for qualified employment positions for which a credit was claimed and allowed in the first year.

E. The net increase in the number of qualified employment positions is the lesser of the total number of filled qualified employment positions created during the taxable year or the difference between the average number of full‑time employees in the current tax year and the average number of full‑time employees during the immediately preceding taxable year.� The net increase in the number of qualified employment positions computed under this subsection may not exceed four hundred qualified employment positions per taxpayer each year.

F. A taxpayer who claims a credit under section 20‑224.04 shall not claim a credit under this section with respect to the same employment positions.

G. If the allowable tax credit exceeds the state premium tax liability, the amount of the claim not used as an offset against the state premium tax liability may be carried forward as a tax credit against subsequent years' state premium tax liability for a period not exceeding five taxable years.

H. If the business is sold or changes ownership through reorganization, stock purchase or merger, the new taxpayer may claim first year credits only for the qualified employment positions that it created and filled with an eligible employee after the purchase or reorganization was complete.� If a person purchases a taxpayer that had qualified for first or second year credits or if an insurance business changes ownership through reorganization, stock purchase or merger, the new taxpayer may claim the second or third year credits if it meets other eligibility requirements of this section.� Credits for which a taxpayer qualified before the changes described in this subsection are terminated and lost at the time the changes are implemented.

I. An insurer that claims a tax credit against state premium tax liability is not required to pay any additional retaliatory tax imposed pursuant to section 20‑230 as a result of claiming that tax credit.

J. A failure to timely report and certify to the Arizona commerce authority the information prescribed by section 41‑1525 41-1521, subsection D and in the manner prescribed by section 41‑1525 41-1521, subsection E disqualifies the insurer from the credit under this section. The department of insurance shall require written evidence of the timely report to the Arizona commerce authority.

K. A tax credit under this section is subject to recovery for a violation described in section 41-1525 41-1521, subsection G.

L. The department may adopt rules necessary for the administration of this section. END_STATUTE

Sec. 2. Section 35-701, Arizona Revised Statutes, is amended to read:

START_STATUTE35-701. Definitions

In this chapter, unless the context otherwise requires:

1. "Corporation" means any corporation organized as an authority as provided in this chapter.

2. "Designated area" means any area of this state which is either designated pursuant to section 36‑1479 as a slum or blighted area as defined in section 36‑1471, designated by regulation as a pocket of poverty or a neighborhood strategy area by the United States department of housing and urban development pursuant to title I of the housing and community development act of 1977 (P.L. 95-128; 42 United States Code sections 5301 through 5320), as amended, and the department of housing and urban development act (P.L. 89-174; 42 United States Code section 3535(d)) or designated by the United States department of housing and urban development as an empowerment or enterprise zone pursuant to the federal omnibus budget reconciliation act of 1993 (P.L. 103-66; 26 United States Code section 1391(g)) or an area certified as an enterprise zone pursuant to section 41‑1524, subsection B.

3. "Governing body" means:

(a) The board or body in which the general legislative powers of the municipality or the county are vested.

(b) The Arizona board of regents with respect to a corporation formed with the permission of the Arizona board of regents.

4. "Income" means gross earnings from wages, salary, commissions, bonuses or tips from all jobs, net earnings from such person's or family's own nonfarm business, professional practice or partnership, and net earnings from such person's or family's own farm.� Income includes income, other than earnings, that consists of amounts received from social security or railroad retirement, interest, dividends, veterans payments, pensions and other regular payments, public assistance or welfare payments, including aid for dependent children, old age assistance and aid to the blind or totally disabled, but excluding separate payments for hospital or other medical care.

5. "Manufactured house" means a structure that is manufactured in a factory after June 15, 1976, that is delivered to a homesite in more than one section and that is placed on a permanent foundation.� The dimensions of the completed house shall not be less than twenty feet by forty feet, the roof must be sloping, the siding and roofing must be the same as those found in site‑built houses and the house must be eligible for thirty year real estate mortgage financing.

6. "Municipality" or "county" means the Arizona board of regents or any incorporated city or town, including charter cities, or any county in this state in which a corporation may be organized and in which it is contemplated the corporation will function.

7. "Persons of low and moderate income" means, for the purposes of financing owner‑occupied single family dwelling units in areas which the municipality has found, pursuant to section 36‑1479, to be slum or blighted areas, as defined in section 36‑1471, persons and families whose income does not exceed two and one‑half times the median family income of this state. In all other areas it means persons and families whose income does not exceed one and one‑half times the median family income of this state.

8. "Project" means any land, any building or any other improvement and all real and personal properties, including machinery and equipment whether or not now in existence or under construction and whether located within or without this state or the municipality or county approving the formation of the corporation, that are suitable for any of the following:

(a) With respect to a corporation formed with the permission of a municipality or county other than the Arizona board of regents:

(i) Any enterprise for the manufacturing, processing or assembling of any agricultural or manufactured products.

(ii) Any commercial enterprise for the storing, warehousing, distributing or selling of products of agriculture, mining or industry, or of processes related thereto, including research and development.

(iii) Any office building or buildings for use as corporate or company headquarters or regional offices or the adaptive use for offices of any building within this state that is on the national register of historic places or rehabilitation of residential buildings located in registered historic neighborhoods.

(iv) A health care institution as defined in section 36‑401.

(v) Residential real property for dwelling units located within the municipality or county approving the formation of the corporation and, in the case of a county, whether or not also within a municipality that is within the county.

(vi) Repairing or rehabilitating single family dwelling units or constructing or repairing residential fences and walls.

(vii) Convention or trade show facilities.

(viii) Airports, docks, wharves, mass commuting facilities, parking facilities or storage or training facilities directly related to any of the facilities as provided in this item.

(ix) Sewage or solid waste disposal facilities or facilities for the furnishing of electric energy, gas or water.

(x) Industrial park facilities.

(xi) Air or water pollution control facilities.

(xii) Any educational institution that is operated by a nonprofit educational organization that is exempt from taxation under section 501(c)(3) of the United States internal revenue code and that is not otherwise funded by state monies, any educational institution or organization that is established� under title 15, chapter 1, article 8 and that is owned by a nonprofit organization, any private nonsectarian school or any private nonsectarian organization established for the purpose of funding a joint technical education school district.

(xiii) Research and development facilities.

(xiv) Commercial enterprises, including facilities for office, recreational, hotel, motel and service uses if the facilities authorized by this item are to be located in a designated area.

(xv) A child welfare agency, as defined in section 8‑501, owned and operated by a nonprofit organization.

(xvi) A transportation facility constructed or operated pursuant to title 28, chapter 22.

(xvii) A museum operated by a nonprofit organization.

(xviii) Facilities owned or operated by a nonprofit organization described in section 501(c) of the United States internal revenue code of 1986.

(xix) New or existing correctional facilities within this state.

(b) With respect to a corporation formed with the permission of the Arizona board of regents, any facility consisting of classrooms, lecture halls or conference centers or any facility for research and development or for manufacturing, processing, assembling, marketing, storing and transferring items developed through or connected with research and development or in which the results of such research and development are utilized, but only if the facility is located in an area designated as a research park by the Arizona board of regents.

9. "Property" means any land, improvements thereon, buildings and any improvements thereto, machinery and equipment of any and all kinds necessary to a project and any other personal properties deemed necessary in connection with a project.

10. "Research park" means an area of land that has been designated by the Arizona board of regents as a research park for a university and that, at the date of designation, is owned by this state or by the Arizona board of regents.

11. "Single family dwelling unit" includes any new, used or manufactured house that meets the insuring requirements of the federal housing administration, the veterans administration or any other insuring entity of the United States government or any private mortgage insurance or surety company that is approved by the federal home loan mortgage corporation or the federal national mortgage association. END_STATUTE

Sec. 3. Title 41, chapter 10, Arizona Revised Statutes, is amended by adding article 2, to read:

ARTICLE 2. ARIZONA QUALITY JOBS INCENTIVES

Sec. 4. Section 41-1525, Arizona Revised Statutes, as added by Laws 2011, second special session, chapter 1, section 45, is transferred and renumbered for placement in title 41, chapter 10, article 2, Arizona Revised Statutes, as added by this act, as section 41-1521, and as so renumbered is amended to read:

START_STATUTE41-1521. Arizona quality jobs incentives; tax credits for new employment; qualifications; definitions

A. The owner of a business or an insurer located in this state before July, 2017 is eligible for income tax credits under section 43‑1074 or 43‑1161 or an insurance premium tax credit under section 20‑224.03 for net increases in qualified employment positions.�

B. To qualify under this section, the owner must in the first taxable year it claims a tax credit:

1. Invest at least five million dollars of capital investment and create at least twenty-five new qualified employment positions within the exterior boundaries of a city or town that has a population of fifty thousand persons or more and that is located in a county that has a population of eight hundred thousand persons or more.

2. Invest at least one million dollars of capital investment and create at least five qualified employment positions in any other location.

C. No more than four hundred new jobs per employer qualify for first year credits each year, and no more than ten thousand new jobs for all employers qualify for first year credits each year.

D. To claim a tax credit, the owner must:

1. Certify to the department of revenue or the department of insurance, as applicable, on or before the due date of the tax return, including any extensions for the year for which the credit is claimed, in a form prescribed by the department, including electronic media, information that the department may require, including the ownership interests of co‑owners of the business if the business is a partnership, limited liability company or an S corporation or beneficial interest if the business is a trust, and the following information for each employee in the location:

(a) The date of initial employment.

(b) The number of hours worked during the year.

(d) The employee's annual compensation.

(e) The total cost of health insurance for the employee and the cost paid by the employer.

(f) Other information required by the department.

2. Report and certify to the authority the following information, and provide supporting documentation, on a form and in a manner approved by the authority, and as specified in subsection E of this section, for each year in which the taxpayer earned and claimed or used credits or is carrying forward amounts from previously earned and claimed credits:

(a) The business name and mailing address and any other contact information requested by the authority.

(b) The physical address of the business location.

(c) The average hourly wage and the total amount of compensation paid to employees qualified for the credit and for all employees.

(d) The total number of qualified employment positions and the amount of income tax or premium tax credits qualified for in the taxable year.

(e) The estimated amount of tax credits to be used in the taxable year to offset tax liability.

(f) The estimated amount of tax credits to be available for carryforward in the taxable year and the year in which the credits expire.

(g) The number of jobs and the amount of credits earned and claimed on the prior year's tax return.

(h) The amount of credits used to offset tax liabilities on the prior year's tax return.

(i) The amount of credits available for carryforward as reported on the prior year's tax return and the year the credits expire.

(j) Capital investment made during the taxable year and the preceding taxable year.

(k) Other information necessary for the management and reporting of the incentives under this section.

3. For any year in which the taxpayer is claiming first year credits, report and certify the following additional information and provide supporting documentation to the authority on a form and in a manner approved by the authority, and as specified in subsection E of this section:

(a) That the increase in the number of qualified employment positions for which credit is sought is the least of:

(i) The total number of filled qualified employment positions created at the location during the taxable year.

(ii) The difference between the average number of full‑time employees in the current taxable year and the average number of full‑time employees during the immediately preceding taxable year.

(iii) Four hundred qualified employment positions per taxpayer each year.

(b) That all employees filling a qualified employment position were employed for at least ninety days during the first taxable year.

(c) That none of the employees filling qualified employment positions were employed by the taxpayer during the twelve months before the current date of hire except for those relocating to this state.

(d) That all employees for whom second and third year credits are claimed are in qualified employment positions for which first year credits were allowed and claimed by the taxpayer on the original first and second year tax returns.

(e) That all employees for whom credits are taken performed their job duties primarily at the designated locations of the business.

E. To qualify for first year credits, the report and certification prescribed by subsection D, paragraphs 2 and 3 of this section must be filed with the authority by the earlier of six months after the end of the taxable year in which the qualified employment positions were created or by the date the tax return is filed for the taxable year in which the qualified employment positions were created. To qualify for second year credits, the report and certification prescribed by subsection D, paragraph 2 of this section must be filed with the authority by the earlier of six months after the end of the taxable year or the date the tax return is filed for the taxable year in which the second year credits are allowable.� To qualify for third year credits, the report and certification prescribed by subsection D, paragraph 2 of this section must be filed with the authority by the earlier of six months after the end of the taxable year or the date the tax return is filed for the taxable year in which the third year credits are allowable.

F. Any information submitted to the authority under subsection D, paragraph 2, subdivisions (e) through (j) of this section is exempt from title 39, chapter 1, article 2 and considered to be confidential and is not subject to disclosure except:

1. To the extent that the person or organization that provided the information consents to the disclosure.

2. To the department of revenue for use in tax administration.

G. Documents filed with the authority, the department of insurance and the department of revenue under subsection D of this section shall contain either a sworn statement or certification, signed by an officer of the company under penalty of perjury, that the information contained is true and correct according to the best belief and knowledge of the person submitting the information after a reasonable investigation of the facts.� If the document contains information that is materially false, the taxpayer is ineligible for the tax credits described under subsection A of this section and is subject to recovery of the amount of tax credits allowed in preceding taxable years based on the false information, plus penalties and interest.

H. The authority may make site visits to a taxpayer's facilities if it is necessary to further document or clarify reported information.� The taxpayer must freely provide the access.

I. The authority by rule may prescribe additional reporting requirements for taxpayers who claim tax credits pursuant to this section.

J. On or before September 30 of each year, the authority shall transmit a report to the governor, the president of the senate, the speaker of the house of representatives and the chairpersons of the senate finance committee and the house of representatives ways and means committee and provide a copy of the report to the secretary of state.� The report shall include the following information.

1. The business names, locations, number of employees and amount of compensation paid to employees qualifying for income tax credits as reported to the authority.

2. The amount of capital investment, made during the preceding fiscal year and cumulatively.

3. The total amount of income tax credits allowed for the preceding taxable year and the number of qualified employment positions for which credits were claimed pursuant to sections 43-1074 and 43-1161.

K. J. For the purposes of this section:

1. "Capital investment" means an expenditure to acquire, lease or improve property that is used in operating a business, including land, buildings, machinery and fixtures.

2. "Location" means a single parcel or contiguous parcels of owned or leased land in this state, the structures and personal property contained on the land or any part of the structures occupied by the owner.

2. 3. "Primarily" means more than seventy-five per cent of the square footage of the location or locations.

3. 4. "Qualified employment position" means employment that meets the following requirements:

(a) The position consists of at least one thousand seven hundred fifty hours per year of full-time permanent employment.

(b) The job duties are performed primarily at the location or locations of the business.

(c) The employment provides health insurance coverage for the employee for which the employer pays at least sixty-five per cent of the premium or membership cost.� If the business is self-insured, the employer pays at least sixty-five per cent of a predetermined fixed cost per employee for an insurance program that is payable whether or not the employee has filed claims.

(d) The employer pays compensation at least equal to the median wage by county as computed annually by the authority. END_STATUTE

Sec. 5. Title 41, chapter 10, article 2, Arizona Revised Statutes, as added by this act, is amended by adding sections 41-1522, 41-1523 and 41‑1524, to read:

START_STATUTE41-1522. Certification for property tax classification; definition

A. Through June 30, 2017, the Arizona commerce authority shall annually certify businesses that qualify for property tax incentives under this section.� To qualify under this section:

1. The business must meet the requirements of section 41-1521, subsection B.

2. The business must obtain and submit to the authority a resolution of the governing board of the city or town in which the business will be located, or of the county board of supervisors if the business will not be located in a city or town.� The resolution must acknowledge that the business intends to meet the requirements of this section and consent to the reduced assessed valuation of the taxable property.

B. The authority shall not certify any business for qualification for property tax incentives after June 30, 2017 except as provided by subsection F of this section.� However, certification under this section is valid for ten years, including after 2017, subject to annual recertification if the business continues to meet the other eligibility requirements.

C. In order to be annually recertified pursuant to subsection B of this section, a business must continue to meet all the eligibility requirements of this section and must annually report the following and provide supporting documentation to the authority on a form and in a manner approved by the authority:

1. The business name and mailing address and any other contact information requested by the authority.

2. The physical address of the business location.

3. The assessor's parcel number of real property to which the class six assessment classification will apply.

4. If available, the assessor's account number for personal property to which the class six assessment classification will apply.

5. For the location, the gross receipts, gross payroll and average hourly wage paid to employees for the preceding tax year.

6. Documentation that establishes the type and amount of business activity conducted at the location.

7. Ownership and full cash value of real and personal property to be certified.

8. Changes in location, ownership and operations of the business in the immediately preceding year.

9. The average number of full‑time employees at the location for the immediately preceding year.

10. Other information necessary for the management of these property tax incentives as determined by the authority.

D. To receive classification as class six property for tax purposes, the certified business must submit a copy of the authority's initial certification, each annual recertification and a written request to classify the property to the county assessor of the county in which the property is located on or before December 10 of each year.

E. A business shall submit its application for initial certification or annual recertification to the authority not later than October 1 of each year.� The authority shall notify the appropriate county assessors of all qualified properties located in the assessor's county not later than December 1 of each year.

F. If a business moves from the originally certified location, it loses its eligibility. The business may apply for certification at a new location for the remainder of its ten years if it meets the minimum investment requirements in fixed assets that were not moved from the prior location, meets all other eligibility requirements of this section and has not reached the ten year eligibility limit. For the purposes of this subsection, "fixed assets" means property that is used in operating a business, such as furniture, land, buildings and machinery, and that is not ordinarily converted into cash after it is declared a fixed asset.

G. If a certified business is purchased by another entity or changes by more than twenty per cent of the ownership interest through reorganization, stock purchase or merger, the certification is terminated. The new business may apply for certification according to eligibility requirements of this section.

H. The authority shall notify the department of revenue and the county assessor if a certified business closes, moves or fails to maintain its eligibility, and the assessor shall make the appropriate changes to the classification of the property on tax roll.

I. The authority may make site visits to a taxpayer's facilities if it is necessary to further document or clarify reported information.� The taxpayer must freely provide the access.

J. Documents filed with the authority pursuant to this section shall contain either a sworn statement or certification, signed by an officer of the corporation under penalty of perjury, that the information contained is true and correct according to the best belief and knowledge of the person submitting the information after a reasonable investigation of the facts.� If the document contains information that is materially false, the taxpayer is ineligible for the tax benefits under this section and is subject to recovery of the amount of tax benefits allowed in preceding years based on the false information, including penalties and interest.

K. The authority by rule may prescribe additional reporting requirements for persons who claim a tax benefit pursuant to this section.

L. For the purposes of this section, "location" has the same meaning prescribed in section 41-1521. END_STATUTE

START_STATUTE41-1523. Duties of authority

The authority shall administer this article and shall:

1. Monitor the implementation and operation of this article and continually evaluate the progress made in attracting new businesses.

2. Assist an employer or prospective employer to obtain the benefits of any incentive or inducement authorized by law.

3. Submit an annual written report, evaluating the effectiveness of the incentives and presenting any suggestions to improve the incentives, to the governor no later than March 1 of each year.

4. Adopt rules as necessary to administer this article.

5. Provide information regarding the business incentives on request and conduct informational and instructional seminars and training. END_STATUTE

START_STATUTE41-1524. Annual reports; Arizona commerce authority; department of revenue

A. On or before September 30 of each year, the Arizona commerce authority shall transmit a report to the governor, the president of the senate, the speaker of the house of representatives and the chairpersons of the senate finance committee and the house of representatives ways and means committee, or their successor committees, and shall provide a copy of the report to the secretary of state.� The report shall contain the following information:

1. The business names and locations, number of employees and amount of compensation paid to employees qualifying for income tax credits as reported to the authority pursuant to section 41‑1521.

2. The amount of capital investment made during the preceding fiscal year and cumulatively.

3. The number of businesses certified for property tax incentives pursuant to section 41‑1522 in the preceding fiscal year and cumulatively, and for each such business:

(a) The name and location.

(b) The number of employees.

B. On or before September 30 of each year, the department of revenue shall transmit a report to the governor, the president of the senate, the speaker of the house of representatives and the chairpersons of the senate finance committee and the house of representatives ways and means committee, or their successor committees, and shall provide a copy of the report to the secretary of state.� The report shall contain the following information:

1. The full cash value and assessed valuation of property classified as class six pursuant to section 42‑12006, paragraph 9 and the assessed valuation of that property if it was not classified as class six.

2. The fiscal impact on each taxing jurisdiction for the current tax year of classifying property as class six rather than in the classification in which it would otherwise be classified.

3. The total dollar amount of income tax credits allowed for the preceding taxable year pursuant to sections 43‑1074 and 43‑1161. END_STATUTE

Sec. 6. Section 42-12006, Arizona Revised Statutes, as amended by Laws 2011, second special session, chapter 1, section 79, is amended to read:

START_STATUTE42-12006. Class six property

For purposes of taxation, class six is established consisting of:

1. Noncommercial historic property as defined in section 42‑12101 and valued at full cash value.

2. Real and personal property that is located within the area of a foreign trade zone or subzone established under 19 United States Code section 81 and title 44, chapter 18, that is activated for foreign trade zone use by the district director of the United States customs service pursuant to 19 Code of Federal Regulations section 146.6 and that is valued at full cash value.� Property that is classified under this paragraph shall not thereafter be classified under paragraph 6 of this section.

3. Real and personal property and improvements that are located in a military reuse zone that is established under title 41, chapter 10, article 3 and that is devoted to providing aviation or aerospace services or to manufacturing, assembling or fabricating aviation or aerospace products, valued at full cash value and subject to the following terms and conditions:

(a) Property may not be classified under this paragraph for more than five tax years.

(b) Any new addition or improvement to property already classified under this paragraph qualifies separately for classification under this paragraph for not more than five tax years.

(c) If a military reuse zone is terminated, the property in that zone that was previously classified under this paragraph shall be reclassified as prescribed by this article.

(d) Property that is classified under this paragraph shall not thereafter be classified under paragraph 6 of this section.

4. Real and personal property and improvements or a portion of such property comprising an environmental technology manufacturing, producing or processing facility that qualified under section 41‑1514.02, valued at full cash value and subject to the following terms and conditions:

(a) Property shall be classified under this paragraph for twenty tax years from the date placed in service.

(b) Any addition or improvement to property already classified under this paragraph qualifies separately for classification under this subdivision for an additional twenty tax years from the date placed in service.

(c) After revocation of certification under section 41‑1514.02, property that was previously classified under this paragraph shall be reclassified as prescribed by this article.

(d) Property that is classified under this paragraph shall not thereafter be classified under paragraph 6 of this section.

5. That portion of real and personal property that is used on or after January 1, 1999 specifically and solely for remediation of the environment by an action that has been determined to be reasonable and necessary to respond to the release or threatened release of a hazardous substance by the department of environmental quality pursuant to section 49‑282.06 or pursuant to its corrective action authority under rules adopted pursuant to section 49‑922, subsection B, paragraph 4 or by the United States environmental protection agency pursuant to the national contingency plan (40 Code of Federal Regulations part 300) and that is valued at full cash value.� Property that is not being used specifically and solely for the remediation objectives described in this paragraph shall not be classified under this paragraph. For the purposes of this paragraph, "remediation of the environment" means one or more of the following actions:

(a) Monitoring, assessing or evaluating the release or threatened release.

(b) Excavating, removing, transporting, treating and disposing of contaminated soil.

(d) Treatment, containment or removal of contaminants in groundwater or soil.

6. Real and personal property and improvements constructed or installed from and after December 31, 2004 through December 31, 2010 and owned by a qualified business under section 41-1516 and used solely for the purpose of harvesting, transporting or the initial processing of qualifying forest products removed from qualifying projects as defined in section 41‑1516.� The classification under this paragraph is subject to the following terms and conditions:

(a) Property may be initially classified under this paragraph only in valuation years 2005 through 2010.

(b) Property may not be classified under this paragraph for more than five years.

(c) Any new addition or improvement, constructed or installed from and after December 31, 2004 through December 31, 2010, to property already classified under this paragraph qualifies separately for classification and assessment under this paragraph for not more than five years.

(d) Property that is classified under this paragraph shall not thereafter be classified under paragraph 2, 3 or 4 of this section.

7. Real and personal property and improvements to the property that are used specifically and solely to manufacture from and after December 31, 2006 through December 31, 2016 biodiesel fuel that is one hundred per cent biodiesel and its by-products and that are valued at full cash value.� This paragraph applies only to the portion of property that is used specifically for manufacturing and processing one hundred per cent biodiesel fuel, or its related by-products, from raw feedstock obtained from off-site sources, including necessary on-site storage facilities that are intrinsically associated with the manufacturing process. Any other commercial or industrial use disqualifies the entire property from classification under this paragraph.

8. Real and personal property and improvements that are certified pursuant to section 41‑1511, subsection C, paragraph 2 and that are used for renewable energy manufacturing or headquarters operations as provided by section 42‑12057.� This paragraph applies only to property that is used in manufacturing and headquarters operations of renewable energy companies, including necessary on-site research and development, testing and storage facilities that are associated with the manufacturing process.� Up to ten per cent of the aggregate full cash value of the property may be derived from uses that are ancillary to and intrinsically associated with the manufacturing process or headquarters operation.� Any additional ancillary property is not qualified for classification under this paragraph.� No new properties may be classified pursuant to this paragraph from and after December 31, 2014. Classification under this paragraph is limited to the time periods determined by the Arizona commerce authority pursuant to section 41‑1511, subsection C, paragraph 2, subdivision (a) or (b). Property that is classified under this paragraph shall not thereafter be classified under any other paragraph of this section.

9. Personal property and real property improvements that are constructed or undergo a major renovation from and after December 31, 2011 through June 30, 2017 and that are owned or used by a business that meets the requirements of section 41-1521 and is certified by the Arizona commerce authority pursuant to section 41-1522. Property may not be classified under this paragraph for more than ten tax years. Property that has been classified under this paragraph shall not thereafter be classified under any other provision of this section. END_STATUTE

Sec. 7. Section 43-1074, Arizona Revised Statutes, as added by Laws 2011, second special session, chapter 1, section 95, is amended to read:

START_STATUTE43-1074. Credit for new employment

A. A credit is allowed against the taxes imposed by this title for net increases in full‑time employees hired in qualified employment positions as certified by the Arizona commerce authority pursuant to section 41‑1525 41‑1521.

B. Subject to subsection E of this section, the amount of the credit is equal to three thousand dollars for each full‑time employee hired for the full taxable year in a qualified employment position in each of the first three years of employment, but not more than four hundred employees in any taxable year.

C. To qualify for a credit under this section, the taxpayer and the employment positions must meet the requirements prescribed by section 41‑1525 41-1521.

D. A credit is allowed for employment in the second and third year only for qualified employment positions for which a credit was claimed and allowed in the first year.

F. A taxpayer who claims a credit under section 43-1077, 43-1079 or 43-1083.01 shall not claim a credit under this section with respect to the same employment positions.

G. If the allowable tax credit exceeds the income taxes otherwise due on the claimant's income, or if there are no state income taxes due on the claimant's income, the amount of the claim not used as an offset against the income taxes may be carried forward as a tax credit against subsequent years' income tax liability for a period not exceeding five taxable years.

H. Co-owners of a business, including partners in a partnership, trusts and beneficiaries of a trust and shareholders of an S corporation, as defined in section 1361 of the internal revenue code, may each claim only the pro rata share of the credit allowed under this section based on the ownership interest.� The total of the credits allowed all such owners of the business may not exceed the amount that would have been allowed for a sole owner of the business.

I. If the business is sold or changes ownership through reorganization, stock purchase or merger, the new taxpayer may claim first year credits only for the qualified employment positions that it created and filled with an eligible employee after the purchase or reorganization was complete.� If a person purchases a taxpayer that had qualified for first or second year credits or changes ownership through reorganization, stock purchase or merger, the new taxpayer may claim the second or third year credits if it meets other eligibility requirements of this section.� Credits for which a taxpayer qualified before the changes described in this subsection are terminated and lost at the time the changes are implemented.

J. A failure to timely report and certify to the Arizona commerce authority the information prescribed by section 41‑1525 41-1521, subsection D, and in the manner prescribed by section 41‑1525 41-1521, subsection E disqualifies the taxpayer from the credit under this section. The department shall require written evidence of the timely report to the Arizona commerce authority.

K. A tax credit under this section is subject to recovery for a violation described in section 41-1525 41-1521, subsection G. END_STATUTE

Sec. 8. Section 43-1161, Arizona Revised Statutes, as added by Laws 2011, second special session, chapter 1, section 107, is amended to read:

START_STATUTE43-1161. Credit for new employment

C. To qualify for a credit under this section, the taxpayer and the employment positions must meet the requirements prescribed by section 41‑1525 41-1521.

D. A credit is allowed for employment in the second and third year only for qualified employment positions for which a credit was claimed and allowed in the first year.

F. A taxpayer who claims a credit under section 43‑1164.01, 43‑1165 or 43‑1167 shall not claim a credit under this section with respect to the same employment positions.

H. Co-owners of a business, including corporate partners in a partnership, trusts and beneficiaries of a trust may each claim only the pro rata share of the credit allowed under this section based on the ownership interest.� The total of the credits allowed all such owners of the business may not exceed the amount that would have been allowed for a sole owner of the business.

K. A tax credit under this section is subject to recovery for a violation described in section 41-1525 41-1521, subsection G. END_STATUTE