41-1511. Renewable energy tax incentives; qualification; definitions

(Rpld. 1/1/16)

A. Tax incentives are allowed for expanding or locating qualified renewable energy operations in this state, including income tax credits pursuant to sections 43-1083.01 and 43-1164.01 and property tax classification pursuant to section 42-12006, paragraph 9.

B. To be eligible for the tax incentives, a renewable energy business must apply to the department of commerce, on a form prescribed by the department, for certification of the business as qualifying for the incentives. The application must include:

1. The applicant's name, address, telephone number and federal taxpayer identification number or numbers.

2. The name, address, telephone number and e-mail address of a contact person for the applicant.

3. The address of the site where the qualifying facility will be located.

4. A detailed description of the qualifying facility and fixed capital assets.

5. An estimate of the capital investment and number of employment positions at the qualifying facility, including:

(a) A schedule of qualifying investments.

(b) A list of employment positions, the estimated number of employees to be hired for the positions each year during the first five years of operation and the annual wages for each position, calculated without employee-related benefits.

6. A nonrefundable processing fee in an amount established by rule.

7. Other information as required by the department to determine eligibility for the tax incentives, and the amount of income tax credits, as prescribed by this section.

8. An affirmation, signed by an authorized executive representing the business, that the applicant:

(a) Agrees to furnish records of expenditures for qualifying investments to the department of commerce on request.

(b) Will continue in business at the qualifying facility for ten full calendar years after postapproval for a tax incentive, other than for reasons beyond the control of the applicant.

(c) Agrees to furnish to the department of commerce on request information regarding the amount of tax benefits claimed each year.

(d) Authorizes the department of revenue to provide tax information to the department of commerce pursuant to section 42-2003 for the purpose of determining any inconsistency in information furnished by the applicant.

(e) Consents to the disclosure by the department of commerce of the amount of tax benefits received each year in composite form, without specific identification of any taxpayer.

(f) Agrees to allow site visits and audits to verify the applicant's continuing qualification and the accuracy of information submitted to the department of commerce.

(g) Consents to the adjustment or recapture of any amount of income tax credit due to noncompliance with this section.

9. Letters of good standing from the department of revenue and the county assessor of the county in which the project is located stating that the applicant is in good standing and is not delinquent in the payment of taxes.

C. To be eligible for the tax incentives, the applicant must make new capital investment in this state in a manufacturing facility or headquarters facility or any combination of qualifying facilities, as follows:

1. The applicant may qualify for income tax credits pursuant to section 43-1083.01 or 43-1164.01, as applicable, if:

(a) At least fifty-one per cent of the net new full-time employment positions at the facility pay a wage that equals or exceeds one hundred twenty-five per cent of the median annual wage in this state, as determined by the most recent annual department of commerce occupational wage and employment estimates.

(b) All net new full-time employment positions include health insurance coverage for the employees for which the applicant pays at least eighty per cent of the premium or membership cost, or an equivalent percentage of the cost for alternative health benefit models that offer standard comprehensive coverage.

2. The fixed capital assets shall be classified as class six for the purposes of property taxation pursuant to section 42-12006, paragraph 9 if the qualifying investment amounts to at least twenty-five million dollars. If at least fifty-one per cent of the net new full-time employment positions at the qualifying facility pay a wage that equals:

(a) At least one hundred twenty-five, but less than two hundred, per cent of the median annual wage in this state, as determined by the most recent annual department of commerce occupational wage and employment estimates, the property may be classified as class six for ten tax years.

(b) At least two hundred per cent of the median annual wage in this state, as determined by the most recent annual department of commerce occupational wage and employment estimates, the property may be classified as class six for fifteen tax years.

D. Final eligibility for the tax incentives is subject to any additional requirements prescribed by sections 42-12006, 43-1083.01 and 43-1164.01, as applicable.

E. An applicant may separately apply and qualify with respect to investments for:

1. Facilities in separate locations.

2. Separate expansions of a facility.

F. To determine the amount of income tax credit to be preapproved to a qualifying applicant, the department shall use one of the following computations:

1. Ten per cent of the amount the applicant has projected in total qualifying investment in facilities meeting the following minimum employment requirements:

(a) For renewable energy manufacturing operations, at least one and one-half new full-time employment positions projected by the applicant for each five hundred thousand dollar increment of capital investment.

(b) For renewable energy business headquarters, at least one new full-time employment position projected by the applicant for each two hundred thousand dollar increment of capital investment.

2. For other qualifying renewable energy investment, ten per cent of the amount computed as follows:

(a) Five hundred thousand dollars for each one and one-half new full-time employment positions projected by the applicant in new renewable energy manufacturing operations.

(b) Two hundred thousand dollars for each new full-time employment position projected by the applicant at a new renewable energy business headquarters.

G. Beginning with income tax credits allocated for 2010, an approved income tax credit:

1. Offsets income tax liability for any taxable year within the taxpayer's applicable carryforward period pursuant to section 43-1083.01 or 43-1164.01.

2. Must be claimed on a timely filed original income tax return, including extensions.

3. Must be claimed in five equal installments as provided in section 43-1083.01 or 43-1164.01.

H. The department shall establish a process for qualifying and preapproving applicants for the tax incentives. The department shall not preapprove an applicant as qualifying for tax incentives under this section after December 31, 2014. Preapproval is based on:

1. Priority placement established by the date that the applicant files its initial application with the department.

2. The availability of income tax credit capacity under the dollar limit prescribed by subsection J of this section.

I. Within thirty days after receiving a complete and correct application, the department shall review the application to determine whether the applicant satisfies all of the criteria prescribed by this section and either preapprove the project as qualifying for the purposes of the tax incentives or provide reasons for its denial. The department of commerce shall send copies of the preapproval to the department of revenue and the applicable county assessor.

J. The department shall not preapprove income tax credits exceeding seventy million dollars in any calendar year, except as provided by this subsection and subsection K of this section. A preapproved amount applies against the dollar limit for the year in which the application was submitted regardless of whether the initial preapproval period extends into the following year or years. If, at the end of any year, an unused balance occurs under the dollar limit prescribed by this subsection:

1. The balance shall be allocated to renewable energy businesses that successfully appeal the denial of approval under this section. Any amount of income tax credits due to successful appeals that are not paid from an unused balance at the end of any year shall be paid against the dollar limit in the following year.

2. Any remaining unused balance shall be reallocated for the purposes of this section in the following year.

K. The department shall reallocate the amount of income tax credits that are voluntarily relinquished under subsection L of this section, that lapse under subsection M of this section or that lapse under subsection O of this section. The reallocation shall be to other renewable energy businesses that applied in the original credit year based on priority placement. Once reallocated, the amount of the credit applies against the dollar limit of the original credit year regardless of the year in which the reallocation occurs.

L. A taxpayer may voluntarily relinquish unused credit amounts.

M. Preapproval under this section lapses, the application is void and the amount of the preapproved income tax credits do not apply against the dollar limit prescribed by subsection J of this section if, within twelve months after preapproval, the renewable energy business fails to provide to the department documentation of its expenditure of two hundred fifty thousand dollars in qualifying investment or, if the period over which the qualifying investment will be made exceeds twelve months, documentation of additional expenditures as required in this subsection for each twelve month period.

N. Beginning in 2010, after October 31 of each year, if the department has preapproved the maximum calendar year income tax credit amount pursuant to subsection J of this section, the department may accept initial applications for the next calendar year, but the preapproval of any application pursuant to this subsection shall not be effective before the first business day of the following calendar year.

O. When the facility begins operations, a renewable energy business that was preapproved for income tax credits under this section shall apply to the department in writing for postapproval of the credits, submit documentation certifying the total amount and dates of the qualifying investments and identifying the fixed capital assets associated with the facility incurred from the date of preapproval. From and after December 31, 2009, the department shall provide postapproval to a renewable energy business that it has met the eligibility requirements of this section and shall notify the department of revenue that the renewable energy business may claim the tax credits pursuant to sections 43-1083.01 and 43-1164.01. If the amount of qualifying investment actually spent is less than the amount preapproved for income tax credits, the preapproved amount not incurred lapses and does not apply against the dollar limit prescribed by subsection J of this section for that year.

P. The department of commerce may rescind the business' certification if the business no longer meets the terms and conditions required for qualifying for the tax incentives. The department may give special consideration, or allow temporary exemption from recapture of tax benefits, in the case of extraordinary hardship due to factors beyond the control of the qualifying business.

Q. If the department of commerce rescinds an applicant's preapproval under subsection P of this section, it shall notify the department of revenue and the county assessor of the action and the conditions of noncompliance. If the department of revenue obtains information indicating a possible failure to qualify and comply, it shall provide that information to the department of commerce. The department of revenue may require the business to file appropriate amended tax returns reflecting any recapture of income tax credits under section 43-1083.01 or 43-1164.01.

R. Preapproval and postapproval of a business for the purposes of tax incentives under this section do not constitute or imply compliance with any other provision of law or any regulatory rule, order, procedure, permit or other measure required by law. To maintain qualification for tax incentives under this section, a business must separately comply with all environmental, employment and other regulatory measures.

S. For five years after postapproval for tax incentives under this section, in any action involving the liquidation of the business assets or relocation out of state this state claims the position of a secured creditor of the business in the amount of income tax credits the business received pursuant to section 43-1083.01 or 43-1164.01.

T. Any information gathered from renewable energy business for the purposes of this section is considered to be confidential taxpayer information and shall be disclosed only as provided in section 42-2003, subsection B, paragraph 12, except that the department shall publish the following information in its annual report:

1. The name of each renewable energy business and the amount of income tax credits preapproved for each qualifying investment.

2. The amount of credits that were postapproved with respect to each qualifying investment.

U. The department shall:

1. Keep annual records of the information provided on applications for renewable energy businesses. These records shall reflect a percentage comparison of the annual amount of monies exempted or credited to qualifying renewable energy businesses to the estimated amount of monies spent in this state in the form of qualifying investments.

2. Maintain annual data on growth in this state of renewable energy businesses and industry employment and wages.

3. Not later than April 30 of each year, prepare and publish a report summarizing the information collected pursuant to this subsection. The department shall make copies of the annual report available to the public on request.

V. The department of commerce shall adopt rules and prescribe forms and procedures as necessary for the purposes of this section. The department of commerce and the department of revenue shall collaborate in adopting rules as necessary to avoid duplication and inconsistencies while accomplishing the intent and purposes of this section.

W. 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. "Headquarters" means a principal central administrative office where primary headquarters related functions and services are performed, including financial, personnel, administrative, legal, planning and similar business functions are performed.

3. "Manufacturing" means fabricating, producing or manufacturing raw or prepared materials into usable products, imparting new forms, qualities, properties and combinations. Manufacturing does not include generating electricity for off-site consumption.

4. "Qualifying investment" means investment in land, buildings, machinery and fixtures for expansion of an existing facility or establishment of a new facility in this state. Qualifying investment does not include relocating an existing facility in this state to another location in this state without additional capital investment.

5. "Renewable energy operations" are limited to manufacturers of, and headquarters for, systems and components that are used or useful in manufacturing renewable energy equipment for the generation, storage, testing and research and development, transmission or distribution of electricity from renewable resources, including specialized crates necessary to package the renewable energy equipment manufactured at the facility.