State Tax Credit News Briefs – July 2019

Wednesday, July 3, 2019

The California state Senate May 28 unanimously passed legislation to create a state historic tax credit (HTC). S.B. 451 would create a state HTC from 2021 through 2025 worth 20 percent of qualified rehabilitation expenses (QRE), with a 5 percent bonus for properties that meet certain criteria, including low-income housing. The credit would have a $50 million annual statewide cap, with $10 million set aside for qualified historic residences and properties with QREs of less than $1 million. The legislation would require annual funding through the state budget. The bill will now be taken up by the state Assembly.

***

The Texas Comptroller of Public Accounts ruled April 23 that an operator of a poultry processing plant in Texas was entitled to the refund for the operator’s enterprise project designation. In the decision, the comptroller notes that in Texas, qualified businesses in severely distressed areas of the state designated as “enterprise zones” are eligible for refunds of sales and use taxes paid on taxable items purchased for use at the qualified business site related to the project or activity. In this case, the comptroller sought recapture of refunded amounts because it determined a number of employees resided in Louisiana, resulting in the total number of qualifying employees falling below the required level. However, the statutory definition of “qualified employee” does not require that an employee live in or be a resident of Texas. Therefore, the Louisiana employees do not disqualify the operator from receiving the original refund, and the assessment attempting to recapture the refund amounts must be deleted. 

***

Iowa H.B. 772, which was effective May 20, modifies the existing Workforce Housing Tax Incentives program. For applications made on or after July 1, 2019, the bill replaces the current first-come, first-served basis to a competitive application process. The bill also limits the tax incentives available to an individual housing development to no more than the amount of tax incentives provided in the project agreement. The program’s annual maximum aggregate tax credit amount that may be awarded to projects in a fiscal year was increased from $20 million to $25 million for fiscal year 2020 and after and the bill allows the entire $25 million FY 2020 allocation to be used for small-city projects registered before July 1.

***

Tennessee S.B. 1462 expands the definitions of eligible housing entities and eligible activities that qualify a financial institution’s investment for the community investment tax credit. Under the new law, which was effective May 10, the definition of eligible activity and eligible entity are defined. The definition of eligible activity in Tennessee Code Section 67-4-2109(h)(3)(A) includes the construction or expansion of an office or other facility in which low-income housing related planning and educational opportunities will be provided. The definition of an eligible entity in Section 67-4-2109(h)(3)(B) includes a development district that engages in eligible activity.

***

Indiana S.B. 563 establishes the small business innovation voucher program. The program allows vouchers to be provided to eligible small businesses to be used by the business to purchase research and development support or other forms of technical assistance and services from an Indiana institution of higher education or other authorized research provider. The credit is equal to the qualified investment that the taxpayer makes during the taxable year approved by the Indiana Economic Development Corporation (IEDC) in an agreement between the taxpayer and the IEDC, multiplied by the applicable credit percentage set out in the statute. The IEDC will administer the program. Effective Jan. 1, 2020, Indiana adopts the redevelopment tax credit that can be claimed against the adjusted gross income tax, the insurance premiums tax and the financial institutions tax, in that order. The credit may be carried forward nine years, but cannot be carried back or refunded. A redevelopment tax credit awarded before July 1, 2029, can be transferred.

***

South Carolina H.B. 4133 was effective May 16 and amends the community development tax credits. The bill allows a tax credit of 50 percent of any cash donation to a community development corporation or development financial institution; increases the aggregate credit for all taxpayers for tax years by $1 million beginning after 2018; extends the provisions of the community and economic development act until June 30, 2023; and provides that returns on investments in certified community development corporations or financial institutions cannot exceed the total amount of the initial investment. 
 

Journal Category: 
Authors: