Chapter 334

2004 -- H 8694 SUBSTITUTE A

Enacted 07/02/04

 

 

 

A N A C T

RELATING TO TAXATION -- PASSIVE INVESTMENT TREATMENT

     

     

     Introduced By: Representative Steven M. Costantino

     Date Introduced: June 23, 2004

 

     

It is enacted by the General Assembly as follows:

 

     SECTION 1. Chapter 44-11 of the General Laws entitled "Business Corporation Tax" is

hereby amended by adding thereto the following sections:

     44-11-43. Passive investment treatment. – (a) Notwithstanding any amendments or

revisions to, or the repeal of, section 44-11-1(1)(vii) of the general laws, or any other law, or new

legislative action that shall serve to repeal or limit the benefits conferred therein, the provisions of

that statute as in effect on the date of passage of this section shall continue to be applicable until

December 31, 2014 for a "qualifying business" that meets the requirements set forth herein.

     (b) A "qualifying business" for the purposes of this chapter shall mean a business which

meets the terms and conditions imposed by the board of directors of the Rhode Island economic

development corporation and is designated as such upon a finding of fact that:

     (1) The business has committed to relocate from outside the state to a Rhode Island

location no less than an annual tax year average of two hundred and fifty (250) full-time

employees with a combined payroll of no less than twelve million dollars ($12,000,000) annually

within twenty-eight (28) months following such designation; for the purposes of this section "full-

time employee" means any employee of the qualified business who works a minimum of thirty

(30) hours per week within the state;

     (2) The business would not relocate such jobs to the state but for such a designation of a

qualifying business; and

     (3) The annual salary of each employee counted in section 44-11-43(1)(b) shall be no less

than twenty-five thousand dollars ($25,000) per year, plus benefits typical to the industry.

     (c) The division of taxation shall require annual reports from a qualified business, which

shall include, but not be limited to, the number of individuals employed by the company within

the state, the job descriptions, and the annual salaries. The division of taxation shall verify these

annual reports and certify that they are correct. The certification shall be sent to the board of

directors of the economic development corporation, president of the senate, speaker of the house,

the chairperson of the senate finance committee, the chairperson of the house finance committee,

the senate fiscal advisor, and the house fiscal advisor. If the division of taxation finds that the

qualified business no longer meets the criteria set forth in section 44-11-43(b)(1) or (3), and if,

sixty (60) days after receipt of written notice from the division of taxation describing such finding

in detail, the business has reasonably cured the noticed violations, then such business will

continue to receive the benefits offered under the provisions of subsection 44-11-43(f) as if such

violation had not occurred, otherwise that business shall no longer be considered a qualified

business and shall no longer be entitled to any further benefits under any agreement made under

the provisions of subsection 44-11-43(f) and such provisions shall become null and void.

     Notwithstanding the foregoing, upon a finding the violation was caused by natural

disaster, acts of terrorism, acts of war, or other similar events reasonably beyond the control of

the business, the division of taxation may extend the cure period hereunder for up to twelve

months.

     (d) The economic development corporation shall certify only one company pursuant to

this section, and such certification shall be issued prior to August 31, 2004.

     (e) The economic development corporation shall be authorized to enter into such

agreements as it may deem necessary or prudent in order to memorialize and effect the intent of

the provisions of this section. The terms of such agreements shall not extend beyond December

31, 2014. Any such agreement shall include provisions for recapture of some portion of lost tax

revenue, if any, resulting from the conveyance of the benefits contemplated hereunder, if the

division of taxation finds that the qualified business has failed to maintain its qualified status

pursuant to subsection (c) above. Such recapture provisions shall be in place for the first five (5)

years of the agreement, and shall require the recapture of the value of any tax revenue lost in the

last tax year that the company was a qualified company. Such recapture shall only apply to tax

revenue lost through the amendment or revision to, or the repeal of, section 44-11-1(1)(vii) of the

general laws, or any other law, or new legislative action that shall serve to repeal or limit the

benefits conferred therein, and the subsequent avoidance of such newly imposed tax by the

company through the function of this section 44-11-43 of the general laws. Calculation of any

amount recaptured shall take into account other preferential tax treatments, credits, or other

benefits in order to assure that the company is treated no less favorably under the recapture

calculation than they would have been if they had not become a qualifying company under the

provisions of this section. The corporation may, within the terms of the contract, include as a

condition of default the failure to maintain employment criteria more rigorous than the criteria set

forth in section 44-11-43(b)(1) or (3); however, a default for violation such higher contractual

standards shall not necessitate a recapture of lost revenues as contemplated herein.

     SECTION 2. This act shall take effect upon passage.

     

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LC03746/SUB A

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