2019 -- S 0220

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LC001038

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2019

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A N   A C T

RELATING TO TAXATION -- PAWTUCKET OPPORTUNITY ZONE INCOME TAX

CREDIT ACT

     

     Introduced By: Senators Conley, Nesselbush, Crowley, and Cano

     Date Introduced: January 31, 2019

     Referred To: Senate Housing & Municipal Government

     It is enacted by the General Assembly as follows:

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

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adding thereto the following chapter:

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CHAPTER 70

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PAWTUCKET OPPORTUNITY ZONE INCOME TAX CREDIT ACT

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     44-70-1. Short title.

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     This chapter shall be known and may be cited as "Pawtucket Opportunity Zone Income

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Tax Credit Act."

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     44-70-2. Definitions.

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

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them in this chapter unless the context indicates otherwise:

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

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

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

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

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

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

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

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corporation.

 

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     (4) "Pawtucket qualified opportunity fund" means a qualified opportunity fund, as

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

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

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qualified opportunity zone which is located in the city of Pawtucket.

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     (5) "Pawtucket qualified opportunity zone business property" means qualified

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

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located in a qualified opportunity zone which is located in the city of Pawtucket.

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

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     (i) The date the owner of the Pawtucket qualified opportunity zone business property

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receives, for any portion of the Pawtucket qualified opportunity zone business property, a

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certificate or other authorization for occupancy;

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

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

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

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

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

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

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

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

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

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

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     44-70-3. Pawtucket opportunity zone tax credit.

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

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

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claimed for the taxable year in which the Pawtucket qualified opportunity zone business property

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acquired, constructed, or renovated by a Pawtucket qualified opportunity fund is placed in

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service, and shall equal ten percent (10%) of the amount of the investment in Pawtucket qualified

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opportunity zone business property.

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     (b) If the amount of the tax credit exceeds a Pawtucket qualified opportunity fund's total

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tax liability for the year in which the Pawtucket qualified opportunity zone business property is

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placed in service, the amount that exceeds the Pawtucket qualified opportunity fund's tax liability

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may be carried forward for credit against the taxes imposed for the succeeding seven (7) years, or

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until the full credit is used, whichever occurs first. Credits allowed to a Pawtucket qualified

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opportunity fund that is a partnership or a limited liability company taxed as a partnership shall be

 

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passed through to the persons designated as partners or members respectively pro rata or pursuant

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to an executed agreement among such persons designated as partners or members documenting

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

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of such entity.

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     (c)(1) If the Pawtucket qualified opportunity fund or its partners or members have not

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claimed the tax credits in whole or part, the Pawtucket qualified opportunity fund eligible for the

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tax credits may assign, transfer or convey the credits, in whole or in part, by sale or otherwise to

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any individual or entity. The assignee of the tax credits may use acquired credits to offset up to

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one hundred percent (100%) of the tax liabilities otherwise imposed pursuant to chapter 11, 14,

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17 or 30 of this title. The assignee may apply the tax credit against taxes imposed on the assignee

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until the end of the seventh calendar year after the year in which the Pawtucket qualified

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opportunity zone business property acquired, constructed, or renovated by the Pawtucket

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qualified opportunity fund investment is placed in service or until the full credit assigned is used,

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whichever occurs first. Fiscal year assignees may claim the credit until the expiration of the fiscal

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year that ends within the seventh year after the year in which the Pawtucket qualified opportunity

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zone business property acquired, constructed, or renovated by the Pawtucket qualified

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

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notifying the state of Rhode Island division of taxation, in writing, within thirty (30) calendar

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days following the effective date of the transfer and shall provide any information as may be

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

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

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

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

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

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

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

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

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amount of the sales proceeds without proration.

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     44-70-4. Tax administrator.

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

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

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

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

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

 

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

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

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

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

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cases, to the extent not otherwise prohibited by law.

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

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

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receipts from the sale:

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

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improvement on or to real property that is a Pawtucket qualified opportunity zone business

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property, or

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     (2) To a Pawtucket qualified opportunity fund of tangible personal property that is placed

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in service as a Pawtucket qualified opportunity zone business property.

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

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

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

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     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TAXATION -- PAWTUCKET OPPORTUNITY ZONE INCOME TAX

CREDIT ACT

***

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

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defined by federal law and located in Pawtucket. The act would be implemented by rules

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promulgated by the commerce corporation.

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     This act would take effect upon passage.

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