Bill Text: CT SB00899 | 2011 | General Assembly | Comm Sub

Connecticut Senate Bill 899 (Prior Session Legislation)

Bill Title: An Act Concerning The Use Of Research And Development Tax Credits For Projects In Enterprise Zones.

Spectrum: Slight Partisan Bill (Democrat 2-1)

Status: (Introduced - Dead) 2011-05-11 - Referred by Senate to Committee on Appropriations [SB00899 Detail]

Download: Connecticut-2011-SB00899-Comm_Sub.html

General Assembly		*Substitute Bill No. 899*
*January Session, 2011*		_____SB00899CE____022511____

AN ACT CONCERNING THE USE OF RESEARCH AND DEVELOPMENT TAX CREDITS FOR PROJECTS IN ENTERPRISE ZONES.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. (NEW) (Effective July 1, 2011) (a) As used in this section:

(1) "Commissioner" means the Commissioner of Economic and Community Development;

(2) "Department" means the Department of Economic and Community Development;

(3) "Eligible corporation" means any corporation with research and development credits;

(4) "Eligible development company" means any partnership, including a limited partnership, a limited liability company or any other entity that is treated as a partnership for federal income tax purposes, that (A) is formed by at least one or more eligible corporations and any number of other persons for purposes of conducting a qualified development project described in subsection (c) of this section, and (B) has received a certificate of eligibility from the commissioner, as provided in subsection (b) of this section;

(5) "Enterprise zone" means any such zone designated pursuant to section 32-70 of the general statutes; and

(6) "Research and development credits" means the tax credits allowed pursuant to section 12-217j or 12-217n of the general statutes.

(b) The commissioner may issue a certificate of eligibility to a development company, allowing it to accept research and development credits in furtherance of a qualified development project, as described in subsection (c) of this section. Such eligible development company may receive not more than one certificate of eligibility in any income year. No certificate of eligibility shall be issued after December 31, 2020.

(c) (1) A qualified development project eligible for the transfer of research and development credits pursuant to this section shall be any commercial or residential real estate development project that is (A) newly constructed or undergoing major expansion or renovation, as determined by the commissioner, (B) located in an enterprise zone, (C) undertaken by an eligible development company, and (D) in compliance with section 31-53 of the general statutes, including any such project that would otherwise be exempt pursuant to the provisions of subsection (h) of section 31-53 of the general statutes.

(2) Eligible expenditures for a qualified development project include, but are not limited to, expenditures for (A) land acquisition and permitting, (B) design, (C) construction, (D) demolition, (E) remediation, (F) site preparation and improvements, (G) infrastructure improvements, including, but not limited to, roads, sidewalks, signage or traffic controls, (H) utility improvements for sewer, water, gas, telecommunications, drainage or electricity generation, transmission or distribution, (I) alterations or renovations to any existing structures, including, but not limited to, leasehold improvements and furniture, fixtures and equipment that are necessary or appropriate for use in connection with the qualified development project, (J) tenant procurement, including, but not limited to, marketing, brokerage, rental concessions and moving allowances, and (K) financing or refinancing activities.

(3) A qualified development project shall not include any development that is to be used as a facility for any obscene material or performance, as described in section 53a-193 of the general statutes.

(d) (1) Notwithstanding the provisions of sections 12-217j and 12-217n of the general statutes, an eligible corporation may (A) contribute research and development credits, in whole or in part, to an eligible development company of which it is a member or partner, which contribution shall not be considered a sale, assignment or transfer for purposes of this section, for use by such eligible development company in furtherance of a qualified development project, or (B) sell, assign or otherwise transfer research and development credits, in whole or in part, to one or more taxpayers, so long as the proceeds from such sale, assignment or transfer are contributed, not later than ninety days after such sale, assignment or transfer, to an eligible development company of which it is a member or partner, for use by such eligible development company in furtherance of a qualified development project.

(2) The total amount of research and development credits that may be contributed by an eligible corporation to a particular eligible development company, or sold, assigned or transferred by an eligible corporation to fund a contribution to a particular eligible development company, may not exceed fifty million dollars during any single income year of the eligible corporation.

(3) The eligible corporation shall provide to the eligible development company, or to the taxpayer to which such eligible corporation sells, assigns or transfers research and development credits, a schedule showing when each research and development credit contributed or sold, assigned or transferred, is eligible for use by the eligible corporation.

(4) An eligible development company that receives research and development credits under subdivision (1) of this subsection may sell, assign or otherwise transfer such credits, in whole or in part, to one or more taxpayers, provided the proceeds from such sale, assignment or transfer are used by such eligible development company exclusively in furtherance of the qualified development project.

(e) If an eligible corporation or eligible development company sells, assigns or otherwise transfers research and development credits to another taxpayer, the transferor and transferee shall jointly submit written notification of such transfer to the department not later than thirty days after the date of such transfer. The notification shall include the number of the certificate of eligibility, the date of transfer, the amount of such credits transferred, the tax identification numbers for both the transferor and the transferee, and any other information required by the department. Failure to comply with this subsection shall result in a disallowance of the tax credit until there is full compliance on both the part of the transferor and the transferee. Promptly after receipt of such notification, the department shall issue a tax credit voucher to the transferee. The department shall provide a copy of the notification of assignment and the tax credit voucher to the Department of Revenue Services upon request.

(f) Any transferee of any research and development credits may use such credits as a credit against the tax imposed under chapter 207, 208, 219 or 229 of the general statutes for any income year in which the eligible corporation would have been eligible to claim such credit. Any transferee of any such credits may sell, assign or otherwise transfer such credits, in whole or in part, to one or more taxpayers. The department shall be notified of any such transfer in the manner provided in subsection (e) of this section, and shall issue a tax credit voucher to any such subsequent transferee, with appropriate adjustments to any prior tax credit vouchers issued.

(g) Not later than forty-eight months after the issuance of a certificate of eligibility pursuant to subsection (b) of this section, the eligible development company shall submit an independent certification to the commissioner that the proceeds from the contribution, sale, assignment or transfer of the research and development credits have been used exclusively in furtherance of a qualified development project.

(h) In the event of the termination, for any reason, of a qualified development project prior to the expenditure of the entire amount of the net proceeds of the research and development credits contributed, sold, assigned or transferred pursuant to this section, the eligible development company shall pay to the commissioner an amount equal to one hundred per cent of the net unexpended proceeds prior to making any distribution of such proceeds to any eligible corporation or corporations.

(i) In the event that, at any time after the issuance of a certificate of eligibility or tax credit voucher, the Department of Economic and Community Development or the Department of Revenue Services determines that there was a material misrepresentation or fraud on the part of any person in connection with the submission of an application to obtain such certificate of eligibility or tax credit voucher, and the result of such material misrepresentation or fraud was that such certificate of eligibility or tax credit voucher was issued, the sole and exclusive remedy of the Department of Economic and Community Development and the Department of Revenue Services shall be to seek redress from the person that committed the fraud or misrepresentation, not from any transferee of the research and development credits.

(j) The Department of Economic and Community Development, in consultation with the Department of Revenue Services, shall adopt regulations in accordance with the provisions of chapter 54 of the general statutes, to carry out the purposes of this section.