Small business jobs creation incentive payment

Section 1. “Chapter 62C of the General Laws, as appearing in the 2006 official edition, is hereby amended by inserting after section 67D the following section:-

Section 67E. (a) When used in this section, the following words shall have the following meaning:

"Application year", the calendar year for which a small business submits the information required for a determination as to a jobs incentive payment.

"Small Business", a corporation, sole proprietorship, partnership, limited liability company or any other form of business organization that had total annual sales in its most recently completed fiscal year of less than one million dollars, has 50 or less employees and which has a principal place of business within the commonwealth.

"Commissioner", the commissioner of revenue.

"Eligible Jobs", a number determined by first multiplying each of the local jobs created by a small business during a single calendar year by the job qualifier for that job, and then totaling the number for all of the local jobs created.

"Full time employee", means a Massachusetts resident who is employed for consideration for at least 35 hours per week and whose salary is subject to withholding as provided in chapter 62B; but without limitation, partners, independent contractors and household employees shall not be treated as employees within the meaning of this definition.

"Job qualifier fraction", in the case of either a full-time employee or a part-time employee of a small business, the figure that determines the extent to which that employee is employed in the commonwealth during a single calendar year. The job qualifier fraction for each employer shall be determined by multiplying the following percentages together: ( i ) the percentage of time that an employee worked while employed by the small business expressed as average hours worked per week out of 35 hours, not to exceed 100 per cent; (ii) that employee's time attributable to work in the commonwealth, as a portion of that employee's total work for the small business; and (iii) the portion of the year the employee worked for the company.

"Jobs incentive payment", a business employment incentive payment for small businesses as provided for in this section.

"Local jobs created", the total number of jobs created by a small business during a single calendar year, including jobs performed by persons that are transferred within the company to work at an in-state location from a location based outside the state. 

"Part-time employee", means a Massachusetts resident who is employed for consideration for less than 35 hours per week and whose salary is subject to withholding as provided in chapter 62B; but without limitation, partners, independent contractors and household employees shall not be treated as employees within the meaning of this definition.

"Payment years", in the case of a small business that is determined to be eligible for a jobs incentive payment, the 3 calendar years following the application year.

"Weighted, average employment", for a calendar year, the total number of jobs maintained by a small business located in Massachusetts. The number is to be determined by first multiplying each of the individual jobs maintained by the small business for that year by the job qualifier fraction for that job and then totaling the number for all of these jobs.

(b) A small business that creates 3 or more eligible jobs in Massachusetts during a single calendar year shall be entitled to a jobs incentive payment if it’s weighted average employment for such year reflects a net increase of at least 3 jobs over the company's weighted average employment for the prior calendar year. The jobs incentive payment shall be equal to 50 per cent multiplied by the applicable Massachusetts income tax rate for the salary paid to the persons who perform the newly created eligible jobs for the calendar year in question; provided, however, that such salary shall be subject to Massachusetts withholding pursuant to chapter 62B for such year. For the purposes of this provision, an eligible job shall be deemed created in the commonwealth on the first day for which Massachusetts withholding is required in connection with the compensation paid to the employee.

(c) The jobs incentive payment shall be paid to a small business in 3 equal installments in each of the 3 calendar years commencing with the calendar year subsequent to the application year. If, for the first or second payment year, the company's weighted average employment falls below its weighted average for the application year, the company shall be disqualified from receiving its second installment payment, it may still receive its third installment payment if its weighted average employment for its second payment year is above its weighted average employment for the application year.

(d) A small business that seeks a jobs incentive payment shall apply to the commissioner to receive such payment on a form to be prescribed by the commissioner. This form shall reference the necessary information concerning the eligible jobs created by the small business in the commonwealth during the application year and also the small business' weighted average employment for such year and the prior calendar year. The commissioner shall advise the small business of his or her determination in writing.

(e) Not later than March 1 of each calendar year for which a small business has been approved to receive a jobs incentive payment, the company shall submit to the commissioner, in a form prescribed by the commissioner, the information necessary to evaluate the company's prior year weighted employment average.

(f) A small business that has previously been approved to receive a jobs incentive payment is entitled to re-apply for an additional payment for a second or third application year. In such cases, the company may be entitled to receive a jobs incentive payment that relates to different application years in the same calendar year. When a company has previously been granted a jobs incentive payment for 3 application years, it shall not request an additional jobs incentive payment.

(g) The commissioner shall issue payments, as authorized in subsection (b), without further appropriation. The commissioner may issue rules and regulations as necessary or helpful to implement this section, including rules and regulations to ensure compliance with this section.

(h)  Notwithstanding any other provision of this section, the cumulative dollar amount of all jobs incentive payments available under this section shall not exceed $50,000,000. 

(i) The commissioner may prescribe rules, guidelines or procedures regarding, without limitation, the definition of employer, the application process, limitation on total payments allowable, determination of hiring date and application date, and guidelines necessary to determine whether an employer is part of a related group for purposes of determining a qualified employer, as needed to carry out the purposes of this section.  The commissioner may require that applications be submitted in electronic form.  The commissioner may disallow applications to the extent that she determines, under the facts of a particular case, that there has been no bona fide sustained increased in Massachusetts employment. 

(j)  An incentive payment shall not be conferred under this section for an employee hired after January 1, 2014.

(k) Amounts paid under this section shall be paid without interest and shall be subject to offset under chapters 62C and 62D for any unpaid tax or other obligations of the employer, as specified therein. 

(l)  Amounts withheld by an employer shall be credited against the individual income tax liability of employees under chapter 62, and the employees’ credit for such withholding shall not be affected by any refundable credit received by an employer. 

(m)  For purposes of determining whether an employer is a qualified employer under this section, a trade or business carried by related persons shall be treated as one business.  The commissioner may adopt rules for aggregation of related businesses or employers in order to determine eligibility for the payment under this section.  For purposes of this determination, the employer’s employees shall be deemed to include the employees of any individuals or entities with which or to which the employer is related within the meaning of Internal Revenue Code section 318, or as otherwise determined by the commissioner. “

Veteran Jobs Tax Credit

SECTION 14. Chapter 63 of the General Laws, as appearing in the 2008 Official Edition, is amended by inserting after section 31M the following section: -

Section 31N: (a) As used in this section, the following words shall, unless the context otherwise requires, have the following meanings:

‘Qualified veterans’, a Massachusetts resident who: (i) was a member of the Armed Forces of the United States, a member of the Massachusetts National Guard, or a member of any reserve component of the Armed Forces of the United States; (ii) served on active duty in connection with the Vietnam Conflict, Operation Desert Storm, Operation Enduring Freedom, or Operation Iraqi Freedom; (iii) who has provided the taxpayer with documentation showing honorable discharge; and (iv) was initially hired by the taxpayer on or after January 1, 2010.

‘Sustained employment’, a period of employment that is at least 185 days during a taxable year.

(b) For each taxable year on or after January 1, 2010, each taxpayer is entitled to a credit against the excise due under this chapter in an amount equal to 5%, but in no event to exceed $600, of the gross wages paid by the taxpayer to a qualified veteran in the course of that veteran’s sustained employment during the taxable year.

(c) If a taxpayer is subject to a minimum excise under this chapter, the amount of credit allowed shall not reduce the excise to an amount less than the minimum excise.

(d) A taxpayer entitled to a credit under this section for any taxable year may carry over and apply to its excise for any 1 or more of the next succeeding 5 taxable years, the portion, as reduced from year to year, of those credits which exceed the excise for the taxable year. The tax credit shall be applied to the earliest year for which there is a tax liability. If there are credits for more than one year that are available to offset a liability, the earlier credit shall be applied first.

(e) A taxpayer that has previously been approved to receive a credit under this section shall not be eligible to receive said payment for more than one calendar year. A taxpayer may apply to receive a credit under this section that relates to a different application in the same calendar year or a different application in a different calendar year.