Bill Text: OH SB206 | 2011-2012 | 129th General Assembly | Introduced

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Bill Title: To allow taxpayers to count employees employed through a temporary or professional employment agency toward the payroll and income tax withholding requirements of the job creation and job retention tax credits.

Spectrum: Partisan Bill (Republican 2-0)

Status: (Introduced - Dead) 2011-08-22 - To Ways & Means & Economic Development [SB206 Detail]

Download: Ohio-2011-SB206-Introduced.html

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As Introduced

129th General Assembly Regular Session 2011-2012

S. B. No. 206

Senator Schaffer 

Cosponsor: Senator Balderson 

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A BILL

To amend sections 122.17 and 122.171 of the Revised

1

Code to allow taxpayers to count employees

2

employed through a temporary or professional

3

employment agency toward the payroll and income

4

tax withholding requirements of the job creation

5

and job retention tax credits.

6

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That sections 122.17 and 122.171 of the Revised	7
Code be amended to read as follows:	8

Sec. 122.17.  (A) As used in this section:

9

(1) "Income tax revenue" means the total amount withheld	10
under section 5747.06 of the Revised Code by the taxpayer or by an	11
employment agency during the taxable year, or during the calendar	12
year that includes the tax period, from the compensation of each	13
employee employed in the project to the extent the employee's	14
withholdings are not used to determine the credit under section	15
122.171 of the Revised Code. "Income tax revenue" includes	16
amounts withheld from the compensation of permanent or temporary	17
personnel who are provided for employment in the project through	18
an employment agency. "Income tax revenue" excludes amounts	19
withheld before the day the taxpayer becomes eligible for the	20
credit.	21

(2) "Baseline income tax revenue" means income tax revenue	22
except that the applicable withholding period is the twelve months	23
immediately preceding the date the tax credit authority approves	24
the taxpayer's application multiplied by the sum of one plus an	25
annual pay increase factor to be determined by the tax credit	26
authority. If the taxpayer becomes eligible for the credit after	27
the first day of the taxpayer's taxable year or after the first	28
day of the calendar year that includes the tax period, the	29
taxpayer's baseline income tax revenue for the first such taxable	30
or calendar year of credit eligibility shall be reduced in	31
proportion to the number of days during the taxable or calendar	32
year for which the taxpayer was not eligible for the credit. For	33
subsequent taxable or calendar years, "baseline income tax	34
revenue" equals the unreduced baseline income tax revenue for the	35
preceding taxable or calendar year multiplied by the sum of one	36
plus the pay increase factor.	37

(3) "Excess income tax revenue" means income tax revenue	38
minus baseline income tax revenue.	39

(4) "Employment agency" means an entity that provides an	40
employment service as defined in division (JJ) of section 5739.01	41
of the Revised Code without regard to the exclusions under	42
divisions (JJ)(1) to (5) of that section, and includes a	43
professional employer organization as defined in section 4125.01	44
of the Revised Code.	45

(B) The tax credit authority may make grants under this	46
section to foster job creation in this state. Such a grant shall	47
take the form of a refundable credit allowed against the tax	48
imposed by section 5725.18, 5729.03, 5733.06, or 5747.02 or levied	49
under Chapter 5751. of the Revised Code. The credit shall be	50
claimed for the taxable years or tax periods specified in the	51
taxpayer's agreement with the tax credit authority under division	52
(D) of this section. With respect to taxes imposed under section	53
5733.06 or 5747.02 or Chapter 5751. of the Revised Code, the	54
credit shall be claimed in the order required under section	55
5733.98, 5747.98, or 5751.98 of the Revised Code. The amount of	56
the credit available for a taxable year or for a calendar year	57
that includes a tax period equals the excess income tax revenue	58
for that year multiplied by the percentage specified in the	59
agreement with the tax credit authority. Any credit granted under	60
this section against the tax imposed by section 5733.06 or 5747.02	61
of the Revised Code, to the extent not fully utilized against such	62
tax for taxable years ending prior to 2008, shall automatically be	63
converted without any action taken by the tax credit authority to	64
a credit against the tax levied under Chapter 5751. of the Revised	65
Code for tax periods beginning on or after July 1, 2008, provided	66
that the person to whom the credit was granted is subject to such	67
tax. The converted credit shall apply to those calendar years in	68
which the remaining taxable years specified in the agreement end.	69

(C) A taxpayer or potential taxpayer who proposes a project	70
to create new jobs in this state may apply to the tax credit	71
authority to enter into an agreement for a tax credit under this	72
section. The director of development shall prescribe the form of	73
the application. After receipt of an application, the authority	74
may enter into an agreement with the taxpayer for a credit under	75
this section if it determines all of the following:	76

(1) The taxpayer's project will increase payroll and income	77
tax revenue and the payroll of the taxpayer or of an employment	78
agency that provides personnel for employment in the taxpayer's	79
project;	80

(2) The taxpayer's project is economically sound and will	81
benefit the people of this state by increasing opportunities for	82
employment and strengthening the economy of this state;	83

(3) Receiving the tax credit is a major factor in the	84
taxpayer's decision to go forward with the project.	85

(D) An agreement under this section shall include all of the	86
following:	87

(1) A detailed description of the project that is the subject	88
of the agreement;	89

(2) The term of the tax credit, which shall not exceed	90
fifteen years, and the first taxable year, or first calendar year	91
that includes a tax period, for which the credit may be claimed;	92

(3) A requirement that the taxpayer shall maintain operations	93
at the project location for at least the greater of seven years or	94
the term of the credit plus three years;	95

(4) The percentage, as determined by the tax credit	96
authority, of excess income tax revenue that will be allowed as	97
the amount of the credit for each taxable year or for each	98
calendar year that includes a tax period;	99

(5) The pay increase factor to be applied to the taxpayer's	100
baseline income tax revenue;	101

(6) A requirement that the taxpayer annually shall report to	102
the director of development employment, tax withholding,	103
investment, and other information the director needs to perform	104
the director's duties under this section;	105

(7) A requirement that the director of development annually	106
review the information reported under division (D)(6) of this	107
section and verify compliance with the agreement; if the taxpayer	108
is in compliance, a requirement that the director issue a	109
certificate to the taxpayer stating that the information has been	110
verified and identifying the amount of the credit that may be	111
claimed for the taxable or calendar year;	112

(8) A provision providing that the taxpayer may not relocate	113
a substantial number of employment positions from elsewhere in	114
this state to the project location unless the director of	115
development determines that the legislative authority of the	116
county, township, or municipal corporation from which the	117
employment positions would be relocated has been notified by the	118
taxpayer of the relocation.	119

For purposes of this section, the movement of an employment	120
position from one political subdivision to another political	121
subdivision shall be considered a relocation of an employment	122
position unless the employment position in the first political	123
subdivision is replaced.	124

(E) If a taxpayer fails to meet or comply with any condition	125
or requirement set forth in a tax credit agreement, the tax credit	126
authority may amend the agreement to reduce the percentage or term	127
of the tax credit. The reduction of the percentage or term may	128
take effect in the current taxable or calendar year.	129

(F) Projects that consist solely of point-of-final-purchase	130
retail facilities are not eligible for a tax credit under this	131
section. If a project consists of both point-of-final-purchase	132
retail facilities and nonretail facilities, only the portion of	133
the project consisting of the nonretail facilities is eligible for	134
a tax credit and only the excess income tax revenue from the	135
nonretail facilities shall be considered when computing the amount	136
of the tax credit. If a warehouse facility is part of a	137
point-of-final-purchase retail facility and supplies only that	138
facility, the warehouse facility is not eligible for a tax credit.	139
Catalog distribution centers are not considered	140
point-of-final-purchase retail facilities for the purposes of this	141
division, and are eligible for tax credits under this section.	142

(G) Financial statements and other information submitted to	143
the department of development or the tax credit authority by an	144
applicant or recipient of a tax credit under this section, and any	145
information taken for any purpose from such statements or	146
information, are not public records subject to section 149.43 of	147
the Revised Code. However, the chairperson of the authority may	148
make use of the statements and other information for purposes of	149
issuing public reports or in connection with court proceedings	150
concerning tax credit agreements under this section. Upon the	151
request of the tax commissioner or, if the applicant or recipient	152
is an insurance company, upon the request of the superintendent of	153
insurance, the chairperson of the authority shall provide to the	154
commissioner or superintendent any statement or information	155
submitted by an applicant or recipient of a tax credit in	156
connection with the credit. The commissioner or superintendent	157
shall preserve the confidentiality of the statement or	158
information.	159

(H) A taxpayer claiming a credit under this section shall	160
submit to the tax commissioner or, if the taxpayer is an insurance	161
company, to the superintendent of insurance, a copy of the	162
director of development's certificate of verification under	163
division (D)(7) of this section with the taxpayer's tax report or	164
return for the taxable year or for the calendar year that includes	165
the tax period. Failure to submit a copy of the certificate with	166
the report or return does not invalidate a claim for a credit if	167
the taxpayer submits a copy of the certificate to the commissioner	168
or superintendent within sixty days after the commissioner or	169
superintendent requests it.	170

(I) The director of development, after consultation with the	171
tax commissioner and the superintendent of insurance and in	172
accordance with Chapter 119. of the Revised Code, shall adopt	173
rules necessary to implement this section. The rules may provide	174
for recipients of tax credits under this section to be charged	175
fees to cover administrative costs of the tax credit program. The	176
fees collected shall be credited to the tax incentive programs	177
operating fund created in section 122.174 of the Revised Code. At	178
the time the director gives public notice under division (A) of	179
section 119.03 of the Revised Code of the adoption of the rules,	180
the director shall submit copies of the proposed rules to the	181
chairpersons of the standing committees on economic development in	182
the senate and the house of representatives.	183

(J) For the purposes of this section, a taxpayer may include	184
a partnership, a corporation that has made an election under	185
subchapter S of chapter one of subtitle A of the Internal Revenue	186
Code, or any other business entity through which income flows as a	187
distributive share to its owners. A partnership, S-corporation, or	188
other such business entity may elect to pass the credit received	189
under this section through to the persons to whom the income or	190
profit of the partnership, S-corporation, or other entity is	191
distributed. The election shall be made on the annual report	192
required under division (D)(6) of this section. The election	193
applies to and is irrevocable for the credit for which the report	194
is submitted. If the election is made, the credit shall be	195
apportioned among those persons in the same proportions as those	196
in which the income or profit is distributed.	197

(K) If the director of development determines that a taxpayer	198
who has received a credit under this section is not complying with	199
the requirement under division (D)(3) of this section, the	200
director shall notify the tax credit authority of the	201
noncompliance. After receiving such a notice, and after giving the	202
taxpayer an opportunity to explain the noncompliance, the tax	203
credit authority may require the taxpayer to refund to this state	204
a portion of the credit in accordance with the following:	205

(1) If the taxpayer maintained operations at the project	206
location for a period less than or equal to the term of the	207
credit, an amount not exceeding one hundred per cent of the sum of	208
any credits allowed and received under this section;	209

(2) If the taxpayer maintained operations at the project	210
location for a period longer than the term of the credit, but less	211
than the greater of seven years or the term of the credit plus	212
three years, an amount not exceeding seventy-five per cent of the	213
sum of any credits allowed and received under this section.	214

In determining the portion of the tax credit to be refunded	215
to this state, the tax credit authority shall consider the effect	216
of market conditions on the taxpayer's project and whether the	217
taxpayer continues to maintain other operations in this state.	218
After making the determination, the authority shall certify the	219
amount to be refunded to the tax commissioner or superintendent of	220
insurance, as appropriate. If the amount is certified to the	221
commissioner, the commissioner shall make an assessment for that	222
amount against the taxpayer under Chapter 5733., 5747., or 5751.	223
of the Revised Code. If the amount is certified to the	224
superintendent, the superintendent shall make an assessment for	225
that amount against the taxpayer under Chapter 5725. or 5729. of	226
the Revised Code. The time limitations on assessments under those	227
chapters do not apply to an assessment under this division, but	228
the commissioner or superintendent, as appropriate, shall make the	229
assessment within one year after the date the authority certifies	230
to the commissioner or superintendent the amount to be refunded.	231

(L) On or before the first day of August each year, the	232
director of development shall submit a report to the governor, the	233
president of the senate, and the speaker of the house of	234
representatives on the tax credit program under this section. The	235
report shall include information on the number of agreements that	236
were entered into under this section during the preceding calendar	237
year, a description of the project that is the subject of each	238
such agreement, and an update on the status of projects under	239
agreements entered into before the preceding calendar year.	240

(M) There is hereby created the tax credit authority, which	241
consists of the director of development and four other members	242
appointed as follows: the governor, the president of the senate,	243
and the speaker of the house of representatives each shall appoint	244
one member who shall be a specialist in economic development; the	245
governor also shall appoint a member who is a specialist in	246
taxation. Of the initial appointees, the members appointed by the	247
governor shall serve a term of two years; the members appointed by	248
the president of the senate and the speaker of the house of	249
representatives shall serve a term of four years. Thereafter,	250
terms of office shall be for four years. Initial appointments to	251
the authority shall be made within thirty days after January 13,	252
1993. Each member shall serve on the authority until the end of	253
the term for which the member was appointed. Vacancies shall be	254
filled in the same manner provided for original appointments. Any	255
member appointed to fill a vacancy occurring prior to the	256
expiration of the term for which the member's predecessor was	257
appointed shall hold office for the remainder of that term.	258
Members may be reappointed to the authority. Members of the	259
authority shall receive their necessary and actual expenses while	260
engaged in the business of the authority. The director of	261
development shall serve as chairperson of the authority, and the	262
members annually shall elect a vice-chairperson from among	263
themselves. Three members of the authority constitute a quorum to	264
transact and vote on the business of the authority. The majority	265
vote of the membership of the authority is necessary to approve	266
any such business, including the election of the vice-chairperson.	267

The director of development may appoint a professional	268
employee of the department of development to serve as the	269
director's substitute at a meeting of the authority. The director	270
shall make the appointment in writing. In the absence of the	271
director from a meeting of the authority, the appointed substitute	272
shall serve as chairperson. In the absence of both the director	273
and the director's substitute from a meeting, the vice-chairperson	274
shall serve as chairperson.	275

(N) For purposes of the credits granted by this section	276
against the taxes imposed under sections 5725.18 and 5729.03 of	277
the Revised Code, "taxable year" means the period covered by the	278
taxpayer's annual statement to the superintendent of insurance.	279

Sec. 122.171. (A) As used in this section:

280

(1) "Capital investment project" means a plan of investment	281
at a project site for the acquisition, construction, renovation,	282
or repair of buildings, machinery, or equipment, or for	283
capitalized costs of basic research and new product development	284
determined in accordance with generally accepted accounting	285
principles, but does not include any of the following:	286

(a) Payments made for the acquisition of personal property	287
through operating leases;	288

(b) Project costs paid before January 1, 2002;

289

(c) Payments made to a related member as defined in section	290
5733.042 of the Revised Code or to a consolidated elected taxpayer	291
or a combined taxpayer as defined in section 5751.01 of the	292
Revised Code.	293

(2) "Eligible business" means a taxpayer and its related	294
members with Ohio operations satisfying all of the following:	295

(a) The taxpayer employs at least five hundred full-time	296
equivalent employees at the time the tax credit authority grants	297
the tax credit under this section;	298

(b) The taxpayer makes or causes to be made payments for the	299
capital investment project of either of the following:	300

(i) If the taxpayer is engaged at the project site primarily	301
as a manufacturer, at least fifty million dollars in the aggregate	302
at the project site during a period of three consecutive calendar	303
years, including the calendar year that includes a day of the	304
taxpayer's taxable year or tax period with respect to which the	305
credit is granted;	306

(ii) If the taxpayer is engaged at the project site primarily	307
in significant corporate administrative functions, as defined by	308
the director of development by rule, at least twenty million	309
dollars in the aggregate at the project site during a period of	310
three consecutive calendar years including the calendar year that	311
includes a day of the taxpayer's taxable year or tax period with	312
respect to which the credit is granted.	313

(c) The taxpayer had a capital investment project reviewed	314
and approved by the tax credit authority as provided in divisions	315
(C), (D), and (E) of this section.	316

(3) "Full-time equivalent employees" means the quotient	317
obtained by dividing the total number of hours for which employees	318
were compensated for employment in the project by two thousand	319
eighty. "Full-time equivalent employees" includes hours for which	320
permanent or temporary personnel provided through an employment	321
agency were compensated for employment in the project. "Full-time	322
equivalent employees" shall exclude hours that are counted for a	323
credit under section 122.17 of the Revised Code.	324

(4) "Income tax revenue" means the total amount withheld	325
under section 5747.06 of the Revised Code by the taxpayer or by an	326
employment agency during the taxable year, or during the calendar	327
year that includes the tax period, from the compensation of all	328
employees employed in the project whose hours of compensation are	329
included in calculating the number of full-time equivalent	330
employees.	331

(5) "Manufacturer" has the same meaning as in section	332
5739.011 of the Revised Code.	333

(6) "Project site" means an integrated complex of facilities	334
in this state, as specified by the tax credit authority under this	335
section, within a fifteen-mile radius where a taxpayer is	336
primarily operating as an eligible business.	337

(7) "Related member" has the same meaning as in section	338
5733.042 of the Revised Code as that section existed on the	339
effective date of its amendment by Am. Sub. H.B. 215 of the 122nd	340
general assembly, September 29, 1997.	341

(8) "Taxable year" includes, in the case of a domestic or	342
foreign insurance company, the calendar year ending on the	343
thirty-first day of December preceding the day the superintendent	344
of insurance is required to certify to the treasurer of state	345
under section 5725.20 or 5729.05 of the Revised Code the amount of	346
taxes due from insurance companies.	347

(9) "Employment agency" means an entity that provides an	348
employment service as defined in division (JJ) of section 5739.01	349
of the Revised Code without regard to the exclusions under	350
divisions (JJ)(1) to (5) of that section, and includes a	351
professional employer organization as defined in section 4125.01	352
of the Revised Code.	353

(B) The tax credit authority created under section 122.17 of	354
the Revised Code may grant tax credits under this section for the	355
purpose of fostering job retention in this state. Upon application	356
by an eligible business and upon consideration of the	357
recommendation of the director of budget and management, tax	358
commissioner, the superintendent of insurance in the case of an	359
insurance company, and director of development under division (C)	360
of this section, the tax credit authority may grant the following	361
credits against the tax imposed by section 5725.18, 5729.03,	362
5733.06, 5747.02, or 5751.02 of the Revised Code:	363

(1) A nonrefundable credit to an eligible business;

364

(2) A refundable credit to an eligible business meeting the	365
following conditions, provided that the director of budget and	366
management, tax commissioner, superintendent of insurance in the	367
case of an insurance company, and director of development have	368
recommended the granting of the credit to the tax credit authority	369
before July 1, 2011:	370

(a) The business retains at least one thousand full-time	371
equivalent employees at the project site.	372

(b) The business makes or causes to be made payments for a	373
capital investment project of at least twenty-five million dollars	374
in the aggregate at the project site during a period of three	375
consecutive calendar years, including the calendar year that	376
includes a day of the business' taxable year or tax period with	377
respect to which the credit is granted.	378

(c) In 2010, the business received a written offer of	379
financial incentives from another state of the United States that	380
the director determines to be sufficient inducement for the	381
business to relocate the business' operations from this state to	382
that state.	383

The credits authorized in divisions (B)(1) and (2) of this	384
section may be granted for a period up to fifteen taxable years	385
or, in the case of the tax levied by section 5751.02 of the	386
Revised Code, for a period of up to fifteen calendar years. The	387
credit amount for a taxable year or a calendar year that includes	388
the tax period for which a credit may be claimed equals the income	389
tax revenue for that year multiplied by the percentage specified	390
in the agreement with the tax credit authority. The percentage may	391
not exceed seventy-five per cent. The credit shall be claimed in	392
the order required under section 5725.98, 5729.98, 5733.98,	393
5747.98, or 5751.98 of the Revised Code. In determining the	394
percentage and term of the credit, the tax credit authority shall	395
consider both the number of full-time equivalent employees and the	396
value of the capital investment project. The credit amount may not	397
be based on the income tax revenue for a calendar year before the	398
calendar year in which the tax credit authority specifies the tax	399
credit is to begin, and the credit shall be claimed only for the	400
taxable years or tax periods specified in the eligible business'	401
agreement with the tax credit authority. In no event shall the	402
credit be claimed for a taxable year or tax period terminating	403
before the date specified in the agreement. Any credit granted	404
under this section against the tax imposed by section 5733.06 or	405
5747.02 of the Revised Code, to the extent not fully utilized	406
against such tax for taxable years ending prior to 2008, shall	407
automatically be converted without any action taken by the tax	408
credit authority to a credit against the tax levied under Chapter	409
5751. of the Revised Code for tax periods beginning on or after	410
July 1, 2008, provided that the person to whom the credit was	411
granted is subject to such tax. The converted credit shall apply	412
to those calendar years in which the remaining taxable years	413
specified in the agreement end.	414

If a nonrefundable credit allowed under division (B)(1) of	415
this section for a taxable year or tax period exceeds the	416
taxpayer's tax liability for that year or period, the excess may	417
be carried forward for the three succeeding taxable or calendar	418
years, but the amount of any excess credit allowed in any taxable	419
year or tax period shall be deducted from the balance carried	420
forward to the succeeding year or period.	421

(C) A taxpayer that proposes a capital investment project to	422
retain jobs in this state may apply to the tax credit authority to	423
enter into an agreement for a tax credit under this section. The	424
director of development shall prescribe the form of the	425
application. After receipt of an application, the authority shall	426
forward copies of the application to the director of budget and	427
management, the tax commissioner, the superintendent of insurance	428
in the case of an insurance company, and the director of	429
development, each of whom shall review the application to	430
determine the economic impact the proposed project would have on	431
the state and the affected political subdivisions and shall submit	432
a summary of their determinations and recommendations to the	433
authority.	434

(D) Upon review and consideration of the determinations and	435
recommendations described in division (C) of this section, the tax	436
credit authority may enter into an agreement with the taxpayer for	437
a credit under this section if the authority determines all of the	438
following:	439

(1) The taxpayer's capital investment project will result in	440
the retention of employment in this state.	441

(2) The taxpayer is economically sound and has the ability to	442
complete the proposed capital investment project.	443

(3) The taxpayer intends to and has the ability to maintain	444
operations at the project site for at least the greater of (a) the	445
term of the credit plus three years, or (b) seven years.	446

(4) Receiving the credit is a major factor in the taxpayer's	447
decision to begin, continue with, or complete the project.	448

(E) An agreement under this section shall include all of the	449
following:	450

(1) A detailed description of the project that is the subject	451
of the agreement, including the amount of the investment, the	452
period over which the investment has been or is being made, the	453
number of full-time equivalent employees at the project site, and	454
the anticipated income tax revenue to be generated.	455

(2) The term of the credit, the percentage of the tax credit,	456
the maximum annual value of tax credits that may be allowed each	457
year, and the first year for which the credit may be claimed.	458

(3) A requirement that the taxpayer maintain operations at	459
the project site for at least the greater of (a) the term of the	460
credit plus three years, or (b) seven years.	461

(4) A requirement that the taxpayer retain a specified number	462
of full-time equivalent employees at the project site and within	463
this state for the term of the credit, including a requirement	464
that the taxpayer continue to employ at least five hundred	465
full-time equivalent employees during the entire term of the	466
agreement in the case of a credit granted under division (B)(1) of	467
this section, and one thousand full-time equivalent employees in	468
the case of a credit granted under division (B)(2) of this	469
section.	470

(5) A requirement that the taxpayer annually report to the	471
director of development employment, tax withholding, capital	472
investment, and other information the director needs to perform	473
the director's duties under this section.	474

(6) A requirement that the director of development annually	475
review the annual reports of the taxpayer to verify the	476
information reported under division (E)(5) of this section and	477
compliance with the agreement. Upon verification, the director	478
shall issue a certificate to the taxpayer stating that the	479
information has been verified and identifying the amount of the	480
credit for the taxable year or calendar year that includes the tax	481
period. In determining the number of full-time equivalent	482
employees, no position shall be counted that is filled by an	483
employee who is included in the calculation of a tax credit under	484
section 122.17 of the Revised Code.	485

(7) A provision providing that the taxpayer may not relocate	486
a substantial number of employment positions from elsewhere in	487
this state to the project site unless the director of development	488
determines that the taxpayer notified the legislative authority of	489
the county, township, or municipal corporation from which the	490
employment positions would be relocated.	491

For purposes of this section, the movement of an employment	492
position from one political subdivision to another political	493
subdivision shall be considered a relocation of an employment	494
position unless the movement is confined to the project site. The	495
transfer of an employment position from one political subdivision	496
to another political subdivision shall not be considered a	497
relocation of an employment position if the employment position in	498
the first political subdivision is replaced by another employment	499
position.	500

(8) A waiver by the taxpayer of any limitations periods	501
relating to assessments or adjustments resulting from the	502
taxpayer's failure to comply with the agreement.	503

(F) If a taxpayer fails to meet or comply with any condition	504
or requirement set forth in a tax credit agreement, the tax credit	505
authority may amend the agreement to reduce the percentage or term	506
of the credit. The reduction of the percentage or term may take	507
effect in the current taxable or calendar year.	508

(G) Financial statements and other information submitted to	509
the department of development or the tax credit authority by an	510
applicant for or recipient of a tax credit under this section, and	511
any information taken for any purpose from such statements or	512
information, are not public records subject to section 149.43 of	513
the Revised Code. However, the chairperson of the authority may	514
make use of the statements and other information for purposes of	515
issuing public reports or in connection with court proceedings	516
concerning tax credit agreements under this section. Upon the	517
request of the tax commissioner, or the superintendent of	518
insurance in the case of an insurance company, the chairperson of	519
the authority shall provide to the commissioner or superintendent	520
any statement or other information submitted by an applicant for	521
or recipient of a tax credit in connection with the credit. The	522
commissioner or superintendent shall preserve the confidentiality	523
of the statement or other information.	524

(H) A taxpayer claiming a tax credit under this section shall	525
submit to the tax commissioner or, in the case of an insurance	526
company, to the superintendent of insurance, a copy of the	527
director of development's certificate of verification under	528
division (E)(6) of this section with the taxpayer's tax report or	529
return for the taxable year or for the calendar year that includes	530
the tax period. Failure to submit a copy of the certificate with	531
the report or return does not invalidate a claim for a credit if	532
the taxpayer submits a copy of the certificate to the commissioner	533
or superintendent within sixty days after the commissioner or	534
superintendent requests it.	535

(I) For the purposes of this section, a taxpayer may include	536
a partnership, a corporation that has made an election under	537
subchapter S of chapter one of subtitle A of the Internal Revenue	538
Code, or any other business entity through which income flows as a	539
distributive share to its owners. A partnership, S-corporation, or	540
other such business entity may elect to pass the credit received	541
under this section through to the persons to whom the income or	542
profit of the partnership, S-corporation, or other entity is	543
distributed. The election shall be made on the annual report	544
required under division (E)(5) of this section. The election	545
applies to and is irrevocable for the credit for which the report	546
is submitted. If the election is made, the credit shall be	547
apportioned among those persons in the same proportions as those	548
in which the income or profit is distributed.	549

(J) If the director of development determines that a taxpayer	550
that received a tax credit under this section is not complying	551
with the requirement under division (E)(3) of this section, the	552
director shall notify the tax credit authority of the	553
noncompliance. After receiving such a notice, and after giving the	554
taxpayer an opportunity to explain the noncompliance, the	555
authority may terminate the agreement and require the taxpayer to	556
refund to the state all or a portion of the credit claimed in	557
previous years, as follows:	558

(1) If the taxpayer maintained operations at the project site	559
for less than or equal to the term of the credit, an amount not to	560
exceed one hundred per cent of the sum of any tax credits allowed	561
and received under this section.	562

(2) If the taxpayer maintained operations at the project site	563
longer than the term of the credit, but less than the greater of	564
(a) the term of the credit plus three years, or (b) seven years,	565
the amount required to be refunded shall not exceed seventy-five	566
per cent of the sum of any tax credits allowed and received under	567
this section.	568

In determining the portion of the credit to be refunded to	569
this state, the authority shall consider the effect of market	570
conditions on the taxpayer's project and whether the taxpayer	571
continues to maintain other operations in this state. After making	572
the determination, the authority shall certify the amount to be	573
refunded to the tax commissioner or the superintendent of	574
insurance. If the taxpayer is not an insurance company, the	575
commissioner shall make an assessment for that amount against the	576
taxpayer under Chapter 5733., 5747., or 5751. of the Revised Code.	577
If the taxpayer is an insurance company, the superintendent of	578
insurance shall make an assessment under section 5725.222 or	579
5729.102 of the Revised Code. The time limitations on assessments	580
under those chapters and sections do not apply to an assessment	581
under this division, but the commissioner or superintendent shall	582
make the assessment within one year after the date the authority	583
certifies to the commissioner or superintendent the amount to be	584
refunded.	585

(K) The director of development, after consultation with the	586
tax commissioner and the superintendent of insurance and in	587
accordance with Chapter 119. of the Revised Code, shall adopt	588
rules necessary to implement this section. The rules may provide	589
for recipients of tax credits under this section to be charged	590
fees to cover administrative costs of the tax credit program. The	591
fees collected shall be credited to the tax incentive programs	592
operating fund created in section 122.174 of the Revised Code. At	593
the time the director gives public notice under division (A) of	594
section 119.03 of the Revised Code of the adoption of the rules,	595
the director shall submit copies of the proposed rules to the	596
chairpersons of the standing committees on economic development in	597
the senate and the house of representatives.	598

(L) On or before the first day of August of each year, the	599
director of development shall submit a report to the governor, the	600
president of the senate, and the speaker of the house of	601
representatives on the tax credit program under this section. The	602
report shall include information on the number of agreements that	603
were entered into under this section during the preceding calendar	604
year, a description of the project that is the subject of each	605
such agreement, and an update on the status of projects under	606
agreements entered into before the preceding calendar year.	607

(M)(1) The aggregate amount of tax credits issued under	608
division (B)(1) of this section during any calendar year for	609
capital investment projects reviewed and approved by the tax	610
credit authority may not exceed the following amounts:	611

(a) For 2010, thirteen million dollars;

612

(b) For 2011 through 2023, the amount of the limit for the	613
preceding calendar year plus thirteen million dollars;	614

(c) For 2024 and each year thereafter, one hundred	615
ninety-five million dollars.	616

(2) The aggregate amount of tax credits issued under division	617
(B)(2) of this section during any calendar year for capital	618
improvement projects reviewed and approved by the tax credit	619
authority may not exceed eight million dollars.	620

The limitations in division (M) of this section do not apply	621
to credits for capital investment projects approved by the tax	622
credit authority before July 1, 2009.	623

Section 2. That existing sections 122.17 and 122.171 of the	624
Revised Code are hereby repealed.	625