2019 -- H 5808

========

LC002038

========

     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2019

____________

A N   A C T

RELATING TO TAXATION -- PAWTUCKET/CENTRAL FALLS OPPORTUNITY ZONE

INCOME TAX CREDIT ACT

     Introduced By: Representatives Maldonado, Tobon, Alzate, Barros, and Slater

     Date Introduced: March 06, 2019

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Title 44 of the General Laws entitled "TAXATION" is hereby amended by

adding thereto the following chapter:

CHAPTER 70

PAWTUCKET/CENTRAL FALLS OPPORTUNITY ZONE INCOME TAX CREDIT ACT

     44-70-1. Short title.

     This chapter shall be known and may be cited as "The Pawtucket/Central Falls

Opportunity Zone Income Tax Credit Act."

     44-70-2. Definitions.

     The following words and phrases used in this chapter shall have the meanings given to

them in this chapter unless the context indicates otherwise:

     (1) "Code" means the federal Internal Revenue Code (the "code") 26 U.S.C. 1 et seq.

     (2) "Corporation" means the governmental agency and public instrumentality, formerly

known as the "Rhode Island port authority and economic development corporation" and/or also

formerly known as the "Rhode Island economic development corporation," and now known as the

Rhode Island commerce corporation authorized, created, and established pursuant to § 42-64-4,

or any subsidiary corporation thereof which is established pursuant to § 42-64-7.1.

     (3) "Director" means the chief executive officer of the Rhode Island commerce

corporation.

     (4) "Pawtucket/Central Falls qualified opportunity fund" means a qualified opportunity

fund, as defined in 26 U.S.C. 1400Z-2(d) of the code, that invests, either directly or through a

qualified opportunity zone business, not less than two hundred fifty thousand dollars ($250,000)

in a qualified opportunity zone which is located in the cities of Pawtucket and Central Falls.

     (5) "Pawtucket/Central Falls qualified opportunity zone business property" means

qualified opportunity zone business property as defined in 26 U.S.C. 1400Z-2(d)(2)(D) of the

code that is located in a qualified opportunity zone which is located in the cities of Pawtucket and

Central Falls.

     (6) "Placed in service" means the earlier of:

     (i) The date the owner of the Pawtucket/Central Falls qualified opportunity zone business

property receives, for any portion of the Pawtucket/Central Falls qualified opportunity zone

business property, a certificate or other authorization for occupancy;

     (ii) The year in which, under the depreciation practice of the owner of the qualified

opportunity zone property, the period for depreciation with respect to the property begins; or

     (iii) The year in which the qualified opportunity zone business property is placed in a

condition or state of readiness and availability for its specifically assigned function.

     (7) "Qualified opportunity zone" means a qualified opportunity zone as defined in 26

U.S.C. 1400ZO-1(a) of the code.

     (8) "Qualified opportunity zone business" means a qualified opportunity zone business as

defined in 26 U.S.C. 1400Z-2(d)(3) of the code.

     (9) "Rule or regulation" means any directive promulgated by the Rhode Island commerce

corporation not inconsistent with the laws of the United States or the state.

     44-70-3. Pawtucket/Central Falls opportunity zone tax credit.

     (a) A taxpayer shall be allowed a nonrefundable credit, to be computed as provided in

this chapter, against the tax imposed by chapters 11, 14, 17 and 30 of this title. The credit shall be

claimed for the taxable year in which the Pawtucket/Central Falls qualified opportunity zone

business property acquired, constructed, or renovated by a Pawtucket/Central Falls qualified

opportunity fund is placed in service, and shall equal ten percent (10%) of the amount of the

investment in Pawtucket/Central Falls qualified opportunity zone business property.

     (b) If the amount of the tax credit exceeds a Pawtucket/Central Falls qualified

opportunity fund's total tax liability for the year in which the Pawtucket/Central Falls qualified

opportunity zone business property is placed in service, the amount that exceeds the

Pawtucket/Central Falls qualified opportunity fund's tax liability may be carried forward for

credit against the taxes imposed for the succeeding seven (7) years, or until the full credit is used,

LC002038 - Page 2 of 5

whichever occurs first. Credits allowed to a Pawtucket/Central Falls qualified opportunity fund

that is a partnership or a limited liability company taxed as a partnership shall be passed through

to the persons designated as partners or members respectively pro rata or pursuant to an executed

agreement among such persons designated as partners or members documenting an alternate

distribution method without regard to their sharing of other tax or economic attributes of such

entity.

     (c)(1) If the Pawtucket/Central Falls qualified opportunity fund or its partners or

members have not claimed the tax credits in whole or part, the Pawtucket/Central Falls qualified

opportunity fund eligible for the tax credits may assign, transfer or convey the credits, in whole or

in part, by sale or otherwise to any individual or entity. The assignee of the tax credits may use

acquired credits to offset up to one hundred percent (100%) of the tax liabilities otherwise

imposed pursuant to chapter 11, 14, 17 or 30 of this title. The assignee may apply the tax credit

against taxes imposed on the assignee until the end of the seventh calendar year after the year in

which the Pawtucket/Central Falls qualified opportunity zone business property acquired,

constructed, or renovated by the Pawtucket/Central Falls qualified opportunity fund investment is

placed in service or until the full credit assigned is used, whichever occurs first. Fiscal year

assignees may claim the credit until the expiration of the fiscal year that ends within the seventh

year after the year in which the Pawtucket/Central Falls qualified opportunity zone business

property acquired, constructed, or renovated by the Pawtucket/Central Falls qualified opportunity

fund investment is placed in service. The assignor shall perfect the transfer by notifying the state

of Rhode Island division of taxation, in writing, within thirty (30) calendar days following the

effective date of the transfer and shall provide any information as may be required by the division

of taxation to administer and carry out the provisions of this section.

     (2) For purposes of this chapter, any assignment or sales proceeds received by a taxpayer

for the assignment or sale of the tax credits allowed pursuant to this section shall be exempt from

this title. If a tax credit is subsequently revoked or adjusted, the seller's tax calculation for the

year of revocation or adjustment shall be increased by the total amount of the sales proceeds,

without proration, as a modification under chapter 30 of this title. In the event that the seller is not

a natural person, the seller's tax calculation under chapters 11, 14, 17, or 30 of this title, as

applicable, for the year of revocation or adjustment, shall be increased by including the total

amount of the sales proceeds without proration.

     44-70-4. Tax administrator.

     The tax administrator and his or her agents, for the purpose of ascertaining the

correctness of any credit claimed under the provisions of this chapter, may examine any books,

LC002038 - Page 3 of 5

papers, records, or memoranda bearing upon the matters required to be included in the return,

report, or other statement, and may require the attendance of the person executing the return,

report, or other statement, or of any officer or employee of any taxpayer, or the attendance of any

other person, and may examine the person under oath respecting any matter which the tax

administrator or his or her agent deems pertinent or material in determining the eligibility for

credits claimed. A taxpayer may request information regarding the credit authorized by this

chapter from the tax administrator, and the tax administrator shall provide the information in all

cases, to the extent not otherwise prohibited by law.

     44-70-5. Sales and use tax exemption.

     The sales and use taxes imposed by chapters 18 and 19 of title 44 shall not apply to gross

receipts from the sale:

     (1) To contractors of tangible personal property incorporated into the construction of an

improvement on or to real property that is a Pawtucket/Central Falls qualified opportunity zone

business property, or

     (2) To a Pawtucket/Central Falls qualified opportunity fund of tangible personal property

that is placed in service as a Pawtucket/Central Falls qualified opportunity zone business

property.

     44-70-6. Rules and regulations -- Enforcement.

     The Rhode Island commerce corporation shall have all the powers conferred by chapter

64 of title 42 to enforce the rules and regulations promulgated pursuant to this chapter.

     SECTION 2. This act shall take effect upon passage.

========

LC002038

========

LC002038 - Page 4 of 5

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TAXATION -- PAWTUCKET/CENTRAL FALLS OPPORTUNITY ZONE

INCOME TAX CREDIT ACT

***

     This act would provide a tax credit for qualified investments in "opportunity zones", as

defined by federal law, and located in Pawtucket or Central Falls. The act would be implemented

by rules promulgated by the commerce corporation.

     This act would take effect upon passage.

========

LC002038

========

LC002038 - Page 5 of 5