Chapter 122:16-1 Business Tax Credit

(A) “Authority” means the tax credit authority created pursuant to division (M) of section 122.17 of the Revised Code and subject to sections 122:7-1-02 and 122:7-1-03 of the Ohio administrative code.

(B) “Director” means the director of development of the state of Ohio.

(C) “Taxpayer” means a business entity that satisfies the following:

(1) Is an eligible business as defined in division (A) of section 122.171 of the Revised Code; and

(2) Has applied for a tax credit pursuant to division (D) of section 122.171 of the Revised Code; or

(3) Has entered into an agreement for a tax credit pursuant to division (D) of section 122.171 of the Revised CodeCode.

(D) “Taxable Year” means the annual tax reporting period of the taxpayer prescribed by division (A) of section 5733.031 of the Revised Code with respect to persons subject to the Ohio corporate franchise tax and prescribed by division (M) of section 5747.01 of the Revised Code with respect to persons subject to individual income tax.

(E) “Tax Year” means the calendar year for which the tax imposed by section 5733.06 of the Revised Code is required to be paid.

(F) “Full-time employment position” means a full-time employment position as defined in division (A) of section 122.171 of the Revised Code that exists at least one hundred eighty days immediately preceding the filing of an application for a tax credit and that exist at the time the authority approved the project for a tax credit in a public meeting. Further, a full-time employment position is one that is retained at the project site for the term of the tax credit.

(G) “Capital investment project” means a plan of investment as defined in division (A) of section 122.171 of the Revised Code and includes but is not limited to the acquisition, construction, renovation or repair of buildings, machinery, or equipment that has not been used in business in this state by the taxpayer that owns it, or by a taxpayer that is a related member or predecessor of such a taxpayer, other than as inventory, prior to being used in business at the project site.

(H) “Significant retention” means the project proposes to and actually retains at least 1,500 full-time permanent employment positions at the project site for the term of the tax credit.

HISTORY: Eff 12/11/03

Rule promulgated under: RC 119.03

Rule authorized by: RC 122.171(K)

Rule amplifies: RC 122.171

RC 119.032 Review Dates: 12/11/2008

(A) Application fees. A taxpayer shall submit a five hundred dollar application fee to the department of development at the time of the submission of the tax credit application. These fees shall be utilized to cover the administrative costs of the tax credit program as incurred by the department of development. If the tax credit application is not processed as presented to the authority for consideration, the department of development shall refund the application fee to the taxpayer. In all other instances, the application fee shall be non-refundable.

(B) Servicing fees. A taxpayer shall submit a servicing fee, equal to one hundred twenty-five dollars time twice the term of years of the tax credit, up to a maximum of three thousand seven hundred fifty dollars to the department of development at the time the taxpayer enters into the tax credit agreement. These fees shall be assessed for each grantee listed in the tax credit agreement. These fees shall be utilized to cover the administrative costs of the tax credit program as incurred by the department of development.

(C) Amendment fees. A taxpayer that has already received approval from the authority for tax credit assistance shall submit a three hundred dollar fee to the department of development at the time a request to amend in a substantive manner a previously approved tax credit project. The executive director of the authority shall determine if a request to amend is subject to this fee. Substantive amendments may include but shall not be limited to changes in grantee, project scope, and assignment of tax credits. These fees shall be utilized to cover the administrative costs of the tax credit program as incurred by the department of development.

(D) Late fees. A taxpayer that does not submit a complete annual report postmarked prior to March first of the year the report is due will be assessed a late fee of five hundred dollars on the first day of each ensuing calendar month until the taxpayers submits a complete annual report under division (A) of section 122:16-1-05 of the Ohio administrative code. An annual report submitted to the Director but determined to be substantially incomplete shall be assessed a late fee as stated above. The fee must be paid in full before a tax credit certificate will be issued for the taxable year. These fees shall be utilized to cover the administrative costs of the tax credit program as incurred by the department of development.

(E) Penalty fees. A taxpayer that has its tax credit agreement terminated for failure to submit a complete annual report will be required to pay a penalty fee of ten percent of the total tax credit amount it has received in association with that agreement.

HISTORY: Eff 12/11/2003

Rule promulgated under: RC 119.03

Rule authorized by: RC 122.171(K)

Rule amplifies: RC 122.171

RC 119.032 Review Dates: 12/11/2008

(A) To be considered for the tax credit under section 122.171 of the Revised Code, a taxpayer shall submit to the director a complete tax credit application as made available by the department of development, with such tax credit application including, but not limited to, certification that the taxpayer employed an average of at least one thousand employees in full-time employee positions at the project location for which the tax credit would apply during each of the twelve months preceding the postmarked date of the tax credit application.

(B) Except as otherwise provided in this rule, the authority may grant a tax credit pursuant to section 122.171 of the Revised Code if the authority determines the taxpayer satisfies the requirements of division (A) of this rule and the taxpayer’s proposed project demonstrates all of the following:

(1) The project satisfies the requirements set forth in division (A) and (D) of section 122.171 of the Revised Code;

(2) The project will retain the number of full-time employment positions set forth in the tax credit agreement for the term of the tax credit. For purposes of counting full-time employment positions under the tax credit agreement, positions counted towards the committed number of retained positions set forth in the agreement may be the same or different in whole or in part as the full-time employment positions counted under division (A) of this rule;

(3) The project is the primary beneficiary of direct financial support from a local political subdivision, a county, or a nonprofit economic development agency.

(C) The authority may from time to time set additional eligibility requirements for the projects of taxpayers to receive tax credits under section 122.171 of the Revised Code.

HISTORY: Eff 12/11/2003

Rule promulgated under: RC 119.03

Rule authorized by: RC 122.171(K)

Rule amplifies: RC 122.171

RC 119.032 Review Dates: 12/11/2008

(A) The authority shall not grant a tax credit under section 122.171 of the Revised Code that exceeds seventy-five percent of the state income tax revenue withheld from employees of the taxpayer located at the project site and occupying a full-time employment position, as that term is defined in division (F) of section 122:16-1-01 of the Ohio Administrative Code.

(B) The authority shall not grant a tax credit under section 122.171 of the Revised Code that exceeds a term allowable pursuant to section 122.171(B). The tax credit shall be claimed by the taxpayer for the consecutive taxable years during the term.

(C) The authority shall consider the following factors in determining the tax credit percentage and term to be granted to a taxpayer.

(1) The determinations and recommendations provided under division (C) of section 122.171 of the Revised Code by the director, the director of budget and management, and the tax commissioner.

(2) The average wage of all full-time employment positions at the project site;

(3) The number of full-time employment positions to be retained at the project site;

(4) The plan of capital investment proposed by the project as required by division (A) of section 122.171 of the Revised Code;

(5) The economic condition of the area of the state where the project is located;

(6) The type of project engaged in by the taxpayer at the project site;

(7) The amount of direct local financial support provided to the project; and

(8) The amount of other financial assistance the taxpayer and other related members are to receive from the state for the project.

(D) The authority may grant a tax credit term between eleven and fifteen years if the director recommends and the authority finds that there is significant retention associated with the project.

(E) The director shall issue a certificate under section 122.171(E)(7) of the Revised Code for only those years included in the period during which a refund is available to the taxpayer under sections 5733.12(B) and 5747.11(B) of the Revised Code. In no event shall the director issue a certificate under this rule unless the director has fully executed a tax credit agreement with the taxpayer. Subject to the provisions of section 122.171(E)(7) of the Revised Code, in no event shall the director grant a tax credit under this division unless the number of full-time employment positions to be retained by the taxpayer is greater than one thousand in each year during the term of any agreement with the tax credit authority.

HISTORY: Eff 12/11/2003

Rule promulgated under: RC 119.03

Rule authorized by: RC 122.171(K)

Rule amplifies: RC 122.171

RC 119.032 Review Dates: 12/11/2008

(A) A taxpayer shall be required annually during the term of the tax credit to submit a report to the director specifying the number of eligible retained full-time employment positions, the State of Ohio income tax revenue withheld in connection with the eligible retained full-time employees for the preceding taxable year, the annual payroll of the eligible retained full-time employees, the average hourly base wage of the eligible retained full-time employees, the amount of payments during the preceding taxable year made toward the capital investment associated with the project, and any other information the director deems appropriate to perform his or her duties. For purposes of this rule and division (A) of section 122:16-1-03 of the Ohio Administrative Code, a taxpayers’s application and reports to the director shall be certified as accurate and complete as evidenced by the original signature of any authorized officer of the taxpayer.

(B) The taxpayer’s annual report shall be postmarked prior to or received by the director no later than March first of each year. Upon receiving a written request from the taxpayer, the executive director of the authority may approve an extension of up to sixty calendar days after the due date, if deemed appropriate by the executive director. Any extensions beyond the first sixty days may be granted by the director, on a case by case basis, as the director deems appropriate. Nothing in this section shall be construed as waiving the right of the authority to assess any and all late fees as appropriate under division (D) of section 122:16-1-02 of the Ohio Administrative Code.

(C) The taxpayer shall maintain its operations at the project site for at least twice the number of years as the term of the tax credit. No later than March first of each year following the term of the tax credit, for an additional period equal to the term of the tax credit, the taxpayer shall submit to the director a certification that includes, but is not limited to, information demonstrating the taxpayer maintains operations at the project location and the total employment at the project location.

(D) The taxpayer shall establish and maintain for at least four years from the termination of the tax credit such records as are required by the director. Such records include, but are not limited to, records of personnel conditions of employment. The taxpayer shall organize and make available such records as required under this rule for the review and verification of the director or his representative and appropriate state agencies or officials. The taxpayer shall permit the director or his representative and appropriate state agencies or officials to audit, examine and make excerpts or transcripts from records maintained under this rule at any time during normal business hours upon written notice and as often as the director may reasonably deem necessary. In the event the director determines a taxpayer has submitted an annual report containing erroneous data or data not supported by the records established and maintained under this rule, the director may, after providing notice, require the taxpayer to resubmit corrected annual reports for the years in which reports were filed.

HISTORY: Eff 12/22/2003

Rule promulgated under: RC 119.03

Rule authorized by: RC 122.171(K)

Rule amplifies: RC 122.171

RC 119.032 Review Dates: 12/22/2008

(A) In the event a taxpayer fails to retain the number of full-time employment positions set forth in the tax credit agreement or if the authority finds that the taxpayer has failed to comply with any term set forth in the tax credit agreement, the authority may unilaterally and prospectively reduce the percentage and term of the tax credit or immediately terminate the tax credit as set forth in the tax credit agreement. In the event a taxpayer relocates employment positions in violation of section 122.171 (E)(8) of the Revised Code and that taxpayer has been previously issued tax credit certificates, the authority may, after providing notice, reduce the tax credit rate to preclude the taxpayer from taking any further credits for the term of the tax credit. In the event a taxpayer relocates such positions and has not been previously issued a tax credit certificate, the authority may terminate the tax credit.

HISTORY: Eff 12/11/2003

Rule promulgated under: RC 119.03

Rule authorized by: RC 122.171(K)

Rule amplifies: RC 122.171

RC 119.032 Review Dates: 12/11/2008