Chapter
006
2008 -- H 8016 SUBSTITUTE A
Enacted 04/12/08
A N A C T
RELATING TO TAXATION
-- HISTORIC STRUCTURES -- TAX CREDITS
Introduced By: Representatives Fox, Murphy, McCauley, E Coderre, and Slater
Date Introduced: March 06,
2008
It is
enacted by the General Assembly as follows:
SECTION
1. Sections 44-33.2-2, 44-33.2-3 and 44-33.2-4 of the General Laws in
Chapter
44-33.2 entitled "Historic Structures - Tax Credit" are hereby
amended to read as
follows:
44-33.2-2.
Definitions. -- As used in this chapter:
(1) "Certified historic structure" means a property which is located
in the state of Rhode
Island
and is:
(i) Listed individually on the National Register of Historic Places; or
(ii) Listed individually in the state register of historic places; or
(iii) Located in a registered historic district and certified by either the commission
or
Secretary
of the Interior as being of historic significance to the district.
(2) "Certified rehabilitation" means any rehabilitation of a
certified historic structure
consistent
with the historic character of such property or the district in which the
property is
located
as determined by the commission guidelines.
(3) "Commission" means the Rhode Island historical preservation and
heritage
commission
created pursuant to section 42-45-2.
(4) "Exempt from real property tax" means, with respect to any
certified historic
structure,
that the structure is exempt from taxation pursuant to section 44-3-3.
(5) "Holding period" means twenty-four (24) months after the
commission issues a
certificate
of completed work to the owner. In the case of a rehabilitation which may
reasonably
be
expected to be completed in phases as described in subdivision (10) of this
section, "holding
period"
shall be extended to include a period of time beginning on the date of issuance
of a
certificate
of completed work for the first phase or phases for which a certificate of
completed
work is
issued and continuing until the expiration of twenty-four (24) months after the
certificate
of
completed work issued for the last phase.
(6) "Placed in service" means that substantial rehabilitation work
has been completed
which
would allow for occupancy of the entire structure or some identifiable portion
of the
structure,
or the owner has commenced depreciation of the qualified rehabilitation
expenditures,
whichever
occurs first.
(7) "Principal residence" means the principal residence of the owner
within the meaning
of
section 121 of the Internal Revenue Code [26 U.S.C. section 121]or any
successor provision.
(8) "Qualified rehabilitation expenditures" means any amounts
expended in the
rehabilitation
of a certified historic structure properly capitalized to the building and
either: (i)
depreciable
under the Internal Revenue Code, 26 U.S.C. section 1 et seq., or (ii) made with
respect
to property (other than the principal residence of the owner) held for sale by
the owner.
Fees
pursuant to section 44-33.2-4(d) are not qualified rehabilitation expenditures.
Notwithstanding
the foregoing, except in the case of a nonprofit corporation, there will be
deducted
from qualified rehabilitation expenditures for the purposes of calculating the
tax credit
any
funds made available to the person (including any entity specified in section
44-33.2-3(a))
incurring
the qualified rehabilitation expenditures in the form of a direct grant from a
federal,
state or
local governmental entity or agency or instrumentality of government.
(9) "Registered historic district" means any district listed in the
National Register of
Historic
Places, or the state register of historic places.
(10)
"Substantial rehabilitation" means, with respect to a certified
historic structure, that
the
qualified rehabilitation expenses of the building during the twenty-four (24)
month period
selected
by the taxpayer ending with or within the taxable year exceed fifty percent
(50%) of the
adjusted
basis in such building and its structural components as of the beginning of
such period.
In the
case of any rehabilitation, which may reasonably be expected to be completed in
phases set
forth in
architectural plans and specifications completed before the rehabilitation
begins, the
above
definition shall be applied by substituting "sixty (60) month period"
for "twenty-four (24)
month
period".
44-33.2-3.
Tax credit. -- (a) Any person, firm, partnership, trust, estate,
limited liability
company,
corporation (whether for profit or non-profit) or other business entity that
incurs
qualified
rehabilitation expenditures for the substantial rehabilitation of a property
officially
recorded
as having applied to be certified as a
certified historic structure, by the Rhode Island
historical
preservation and heritage commission through its historic tax credit
application process
prior
to January 1, 2008, and verified by the division of taxation, provided the rehabilitation
meets
standards consistent with the standards of the Secretary of the United States
Department of
the
Interior for rehabilitation as certified by the commission, shall be entitled
to a credit against
the
taxes imposed on such person or entity pursuant to chapter 11, 12, 13, 14, 17
or 30 of this
title.
For certified historical structures or some identifiable portion of a
structure placed in service
prior
to January 1, 2008 the credit shall in
be an amount equal to thirty percent (30%) of the
qualified
rehabilitation expenditures. For certified historical structures or some
identifiable
portion
of a structure placed in service after December 31, 2007, the credit shall not
exceed
twenty-five
percent (25%), twenty-six percent (26%), or twenty-seven percent (27%) of the
qualified
rehabilitation expenditures as contracted between the division of taxation and
the
person,
firm, partnership, trust, estate, limited liability company, corporation
(whether for profit
or
non-profit) or other business entity that incurs qualified rehabilitation
expenditures for the
substantial
rehabilitation of certified historic structures or some identifiable portion of
a structure
to be
placed in service after December 31, 2007.
(b)
Notwithstanding any provisions of the general laws or regulations adopted
thereunder
to
the contrary, including, but not limited to, the provisions of chapter 2 of
title 37, the division of
taxation
is hereby expressly authorized and empowered to enter into contracts with
persons,
firms,
partnerships, trusts, estates, limited liability companies, corporations
(whether for profit or
non-profit)
or other business entities that incur qualified rehabilitation expenditures for
the
substantial
rehabilitation of certified historic structures or some identifiable portion of
a structure
to be
placed in service after December 31, 2007, for the following purposes, all of
which shall be
set
forth in more particular detail as follows:
(1)
Upon payment of the fees as set forth in this section, the division of taxation
shall, on
behalf
of the state of Rhode Island, guaranty through a contract with persons, firms,
partnerships,
trusts,
estates, limited liability companies, corporations (whether for profit or
non-profit) or other
business
entities that will incur qualified rehabilitation expenditures for the
substantial
rehabilitation
of a certified historic structure or some identifiable portion of a structure
to be
placed
in service after December 31, 2007, the delivery of one hundred percent (100%)
of the tax
credit
in an amount which is the lesser of: (i) the amount of the tax credit
identified in the contract
with
the division of taxation on or before May 15, 2008 in consideration of any
processing fees;
or
(ii) the actual qualified rehabilitation expenditures multiplied by the tax
credit percentage
selected
by the taxpayer on or before May 15, 2008 and any processing fees. The tax
credit and
fee
shall not exceed the following combinations which shall be selected by any
person, firm,
partnership,
trust, estate, limited liability company, corporation (whether for profit or
non-profit)
or
other business entity that will incur qualified rehabilitation expenditures for
the substantial
rehabilitation
of certified historic structures or some identifiable portion of a structure to
be
placed
in service after December 31, 2007:
(A)
For an amount of credit not exceeding twenty-five percent (25%) of the
qualified
rehabilitation
expenditures, the fee shall be an amount equal to three percent (3%) of the
qualified
rehabilitation
expenditures.
(B)
For an amount of credit not exceeding twenty-six percent (26%) of the qualified
rehabilitation
expenditures, the fee shall be an amount equal to four percent (4%) of the
qualified
rehabilitation
expenditures.
(C)
For an amount of credit not exceeding twenty-seven percent (27%) of the
qualified
rehabilitation
expenditures, the fee shall be an amount equal to five percent (5%) of the
qualified
rehabilitation
expenditures.
(D)
As referred to in subsection 44-33.2-4(d), two and one quarter percent (2.25%)
of the
qualified
rehabilitation expenditures shall be paid by May 15, 2008 with the remaining
percent to
be
paid by March 5, 2009. Payments made after March 5, 2009 shall accrue interest
as set forth in
section
44-1-7.
(E) The division of taxation and the Rhode Island historical preservation and
heritage
commission
shall reconcile tax credits and fees with the persons, firms, partnerships,
trusts,
estates,
limited liability companies, corporation (whether for profit or non-profit) or
other
business
entities contracted with as part of the final project certification. In the
event that the
processing
fee paid is greater than the amount of actual qualified rehabilitation
expenditures
multiplied
by the percentage chosen pursuant to subsection 44-33.2-3(b), the persons,
firms,
partnerships,
trusts, estates, limited liability companies, corporations (whether for profit
or non-
profit)
or other business entities that incur qualified rehabilitation expenditures for
the substantial
rehabilitation
of certified historic structures or some identifiable portion of a structure to
be
placed
in service after December 31, 2007, shall be refunded such difference, without
interest.
(F)
Any contract executed pursuant to this chapter by a person, firm, partnership,
trust,
estate,
limited liability company, corporation (whether for profit or non-profit) or
other business
entity
that incurs qualified rehabilitation expenditures for the substantial
rehabilitation of certified
historic
structures or some identifiable portion of a structure to be placed in service
after
December
31, 2007, shall be assignable to: (i) an affiliate thereof without any consent
from the
division
of taxation or (ii) a person, firm, partnership, trust, estate, limited
liability company,
corporation
(whether for profit or non-profit) or other business entity that incurs
qualified
rehabilitation
expenditures for the substantial rehabilitation of certified historic
structures or some
identifiable
portion of a structure to be placed in service after December 31, 2007, with
such
assignment
to be approved by the division of taxation, which approval shall not be
unreasonably
withheld.
For purposes of this subsection, "affiliate" shall be defined as any
entity controlling,
controlled
by or under common control with such person, firm, partnership, trust, estate,
limited
liability
company, corporation (whether for profit or non-profit) or other business
entity.
(b) (c) Tax credits allowed pursuant to this chapter shall be
allowed for the taxable year
in which
such certified historic structure or an identifiable portion of the structure
is placed in
service
provided that the substantial rehabilitation test is met for such year.
(c)
(d) If the amount of the tax credit exceeds the taxpayer's total tax
liability for the year
in which
the substantially rehabilitated property is placed in service, the amount that
exceeds the
taxpayer's
tax liability may be carried forward for credit against the taxes imposed for
the
succeeding
ten (10) years, or until the full credit is used, whichever occurs first for
the tax credits.
Credits
allowed to a partnership, a limited liability company taxed as a partnership or
multiple
owners
of property shall be passed through to the persons designated as partners,
members or
owners
respectively pro rata or pursuant to an executed agreement among such persons
designated
as partners, members or owners documenting an alternate distribution method
without
regard
to their sharing of other tax or economic attributes of such entity.
(d) (e) (1) If the taxpayer has not claimed the tax credits in
whole or part, taxpayers
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, including, but not limited to,
condominium owners in the
event
the certified historic structure is converted into condominiums. 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, 12, 13, (other than the tax imposed under
section 44-
13-13),
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 tenth (10th) calendar year after the year in
which the substantially
rehabilitated
property 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 tenth (10th) year after the year in which the substantially
rehabilitated property 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
the
taxpayer
for its assignment or sale of the tax credits allowed pursuant to this section
shall be
exempt
from this title. If a tax credit is subsequently recaptured under subsection
(e) of this
section,
revoked or adjusted, the seller's tax calculation for the year of revocation,
recapture, 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, 12, 13 (other than with respect to the tax
imposed under
section
44-13-13), 14, 17, or 30 of this title, as applicable, for the year of
revocation, recapture, or
adjustment,
shall be increased by including the total amount of the sales proceeds without
proration.
(e) (f) Substantial rehabilitation of property that is exempt
from real property tax shall be
ineligible
for the tax credits authorized under this chapter. In the event a certified
historic
structure
undergoes a substantial rehabilitation pursuant to this chapter and within
twenty-four
(24)
months after issuance of a certificate of completed work the property becomes
exempt from
real
property tax, the taxpayer's tax for the year shall be increased by the total
amount of credit
actually
used against the tax.
(f) (g) In the case of a corporation, this credit is only allowed
against the tax of a
corporation
included in a consolidated return that qualifies for the credit and not against
the tax of
other
corporations that may join in the filing of a consolidated tax return.
44-33.2-4.
Administration. -- (a) To claim the tax credit authorized in this
chapter,
taxpayers
shall apply: (i) to the commission: (i) prior to the certified
historic structure being
placed
in service for a certification that the certified historic structure's
rehabilitation will be
consistent
with the standards of the Secretary of the United States Department of the
Interior for
rehabilitation;
and (ii) after completion of the rehabilitation work of to the
certified historic
structure:
for: (A) to the commission for a certification that the
rehabilitation is consistent with
the
standards of the Secretary of the United States Department of the Interior for
rehabilitation,
and (B) to
the division of taxation for a certification as to the amount of tax credit
for which the
rehabilitation
qualifies. The commission and the division of taxation shall be entitled
to rely on
the
facts represented in the application without independent investigation and,
with respect to the
amount
of tax credit for which the rehabilitation qualifies, upon the certification of
a certified
public
accountant licensed in the state of Rhode Island. The applications shall be
developed by
the
commission and the division of taxation and may be amended from time to
time.
(b) Within ninety (90) days after the commission's and the division of
taxation's receipt
of the
taxpayer's application requesting certification for the completed
rehabilitation work, (i) the
commission
shall issue the taxpayer: (i) a written determination either
denying or certifying the
rehabilitation,
and (ii) the division of taxation shall issue a certification of the
amount of credit for
which
the rehabilitation qualifies. To claim the tax credit, the commission's and
the division of
taxation's certification as to the amount of the tax credit shall
be attached to all state tax returns
on which
the credit is claimed.
(c) No taxpayer may benefit from the provisions of this chapter unless the
owner of the
certified
historic structure grants a restrictive covenant to the commission, agreeing
that during
the
holding period no alterations to the certified historic structure will be made
without the
commission's
approval and in a manner inconsistent with the standards of the Secretary of
the
United
States Department of the Interior.
(d) The division of taxation commission shall charge a fee equal
to two and one quarter
percent
(2.25%) of the qualified rehabilitation expenditures of structures placed in
service after
July 31,
2005 and prior to January 1, 2008. The fee shall have been paid by May 15,
2008 for
certified
historical structures or some identifiable portion of a structure to qualify
for the thirty
percent
(30%) tax credits under subsection 44-33.2-3(a). For certified historical
structures or
some
identifiable portion of a structure placed in service after December 31, 2007,
the division of
taxation
shall charge a fee equal to three percent (3%), four percent (4%), or five
percent (5%) of
the
qualified rehabilitation expenditures as contracted between the division of
taxation and the
person,
firm, partnership, trust, estate, limited liability company, corporation
(whether for profit
or
non-profit) or other business entity that incurs qualified rehabilitation
expenditures for the
substantial
rehabilitation of certified historic structures or some identifiable portion of
a structure
to be
placed in service after December 31, 2007; provided further that two and one
quarter
percent
(2.25%) of the qualified rehabilitation expenditures shall be paid by May 15,
2008 with
the
remaining percent to be paid by March 5, 2009. Payments made after March 5,
2009 shall
accrue
interest as set forth in section 44-1-7.
(e) If information comes to the attention of the commission or the division
of taxation at
any time
up to and including the last day of the holding period that is materially
inconsistent with
representations
made in an application, the commission or the division of taxation may
deny the
requested
certification, or revoke a certification previously given or
terminate the contract, with
any
processing fees paid to be forfeited.
(f)
The general assembly hereby finds that the state's fiscal budgetary crisis is
of such a
nature
to cause immediate peril to the public health, safety or welfare that any
regulations
promulgated
by the division of taxation or the Rhode Island historical preservation and
heritage
commission
in furtherance of this chapter must be promulgated as emergency regulations
pursuant
to subsection 42-35-3(b).
SECTION
2. Chapter 44-33.2 of the General Laws entitled "Historic Structures - Tax
Credit"
is hereby amended by adding thereto the following section:
44-33.2-4.1.
Historic preservation tax credit trust fund. – There is hereby created
the
historic
preservation tax credit trust fund outside of the state general fund for the
purpose of
reserving
funds for tax credits issued under this section. The assembly may cause
sufficient
amounts
to be deposited into the fund equal to the amounts of credits under contract no
later than
September
1, 2008. The assembly authorizes the governor to borrow such funds as necessary
to
guarantee
all obligations incurred under contracts, subject to the provisions of chapter
35-18, the
public
corporation debt management act. The state controller shall transfer amounts
from the fund
to
the state general revenues equal to the credits taken by taxpayers as certified
by the division of
taxation.
All
processing fees collected pursuant to this chapter after June 30, 2008 shall be
deposited
in the historic preservation tax credit trust fund and not the state general
fund.
SECTION
3 This act shall take effect upon passage.
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LC02420/SUB A/6
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