Budget Amendment ID: FY2014-S3-17

OTH 17

Accountability for Discretionary Tax Credits

Messrs. Eldridge and Montigny and Ms. Chang-Diaz moved that the proposed new text be amended by inserting, after section_, the following new section:-

 

SECTION XXX:

 

(a)Section 1 of chapter 62C of the General Laws is hereby amended by adding the following definition:-

“Discretionary tax credit program”: (i) the historic rehabilitation tax credit in section 38R of said chapter 63 and section 6J of said chapter 62; (ii) the life sciences investment tax credit in section 38U of said chapter 63 and subsection (m) of said section 6 of said chapter 62; (iii) the low-income housing tax credit in section 31H of said chapter 63 and section 6I of said chapter 62; (iv) the refundable research credit in subsection (j) of section 38M of said chapter 63; (v) the economic development incentive program in subsection (g) of said section 6 of said chapter 62 and section 38N of said chapter 63; (vi) certified housing development credits of subsection (q) of Section 6 of said Chapter 62 (vii); donated land (conservation) credits of subsection (p) of Section 6 of said Chapter 62; (viii) community investment tax credit of section 6M of said chapter 62 and section 38EE of said chapter 53; and (ix) any discretionarily awarded tax credits under chapter 62 and 63 established after January 1, 2013.

 

(b)Said chapter 62C is hereby further amended by adding the following new section:-

 

SECTION 90:

 

Enforcement of Discretionary Tax Expenditures

(a) For recipient taxpayers that have made a job creation commitment in their initial applications to the administering agency in order to receive such tax credit,

 

(1)At least 90% of such job creation goal shall be fulfilled within two years of the date of discretionary tax credit and maintained as long as the discretionary tax credit is in effect, or five years, whichever is longer.

 

(2)The corporate parent of a recipient corporation must maintain at least 90% of its employment in the Commonwealth as long as the discretionary tax credit is in effect, or not less than five years, whichever is longer.

(b) Notwithstanding any general or special laws to the contrary, if the requirements under paragraphs (i) or (ii) of subsection (a) are not fulfilled, this shall be deemed a material variance and the granting body shall revoke and recapture the discretionary tax credit from the recipient taxpayer as follows:

 

(i)For projects certified before January 1, 2013, if the granting body revokes a discretionary tax credit because of a material variance, the value of such credit that shall be recaptured or otherwise recouped by the commonwealth or municipality shall be the amount the corporate parent would have been allowed to receive after the effective date of revocation.  Revocation shall take effect on the first day of the tax year in which a material variance occurred as determined by the granting body.  If the granting body revokes a discretionary tax credit because of a material misrepresentation or fraud, the value of such tax credit that shall be recaptured or otherwise recouped by the commonwealth or the municipality shall be the total amount of economic benefit approved by the state for the corporate parent.

 

(ii) For projects certified after January 1, 2013, if the granting body revokes a discretionary tax credit, the value of such credit that shall be recaptured or otherwise recouped by the state or municipality shall be the total amount of such tax credit approved by the state or municipality for the corporate parent.

 

(iii) The granting body shall provide notice to the recipient corporation of its intent to revoke and recapture the discretionary tax credit and state the reasons and amount to be recaptured. The recipient corporation shall remit to the governing body such amount within 60 calendar days of the date of such notice.

 

(iv) If a recipient corporation fails to create at least 90% of the required number of jobs or to pay the required wages or benefits for three consecutive calendar years, the granting body shall revoke, and shall so notify the Executive Office of Housing and Economic Development and the recipient corporation. The recipient corporation shall pay back to the granting body all remaining value of the discretionary tax credit it has not previously repaid within 180 calendar days of the date of the notice of such default.

 

(v) Recipient corporations that have defaulted on their agreement and had their full discretionary tax credit recaptured shall be barred from applying for any other economic development subsidy in the Commonwealth for a period not less than 5 years.