§ 38N — Economic development incentive program; tax credit for certified projects

Massachusetts § 38N

• Jurisdiction: Massachusetts
• Part I: ADMINISTRATION OF THE GOVERNMENT
• Title IX: TAXATION
• Ch. 63: TAXATION OF CORPORATIONS

Text

[ Subsection (a) effective until November 20, 2024. For text effective November 20, 2024, see below.]Section 38N. (a)(l) As used in this section, "Certified project'', "EACC'', "EDIP contract'' and "Gateway municipality'' shall have the same meanings as ascribed to them in section 3A of chapter 23A.[ Subsection (a) as amended by 2024, 238, Sec. 200 effective November 20, 2024. For text effective until November 20, 2024, see above.](a) As used in this section, "Certified project'', "EDIP contract'', "Proportion of compliance'' and "Refundable credit'' shall have the same meanings as ascribed to them in section 3A of chapter 23A.[ Subsection (b) effective until November 20, 2024. For text effective November 20, 2024, see below.](b) A corporation subject to tax under this chapter that is the controlling business of a certified project, or an affiliate of a controlling business, may take a credit against the excise imposed by this chapter to the extent that the credit is authorized by the EACC, up to an amount equal to 50 per cent of the liability in a taxable year; provided, however, that the 50 per cent limitation shall not apply where the credit is refundable under subsection (d). The amount of the credit shall be determined by EACC under section 3D of said chapter 23A and other criteria or guidelines that the council shall from time to time adopt; provided, however, that a credit awarded in connection with a certified project that will retain permanent full-time employees in a gateway municipality without creating a net increase in permanent full-time employees shall not exceed $5,000 per retained employee. A credit allowed under this section shall be taken only after the corporation executes an EDIP contract under said section 3D of said chapter 23A.[ Subsection (b) as amended by 2024, 238, Secs. 201 and 202 effective November 20, 2024. For text effective until November 20, 2024, see above.](b) A corporation subject to tax under this chapter that is the controlling business of a certified project, or an affiliate of a controlling business, may take a credit against the excise imposed by this chapter to the extent that the credit is authorized by the EACC. The amount of the credit shall be determined by EACC under section 3D of said chapter 23A and other criteria or guidelines that the council shall from time to time adopt. A credit allowed under this section shall be taken only after the corporation executes an EDIP contract under said section 3D of said chapter 23A.[ First paragraph of subsection (c) effective until November 20, 2024. For text effective November 20, 2024, see below.](c) The total amount of credits that may be authorized by the EACC in a calendar year pursuant to this section and subsection (g) of section 6 of chapter 62 shall not exceed $30,000,000 annually; provided, however, that the total amount shall not include credits under section 38BB of this chapter or subsection (q) of said section 6 of said chapter 62; and provided further, that the total amount shall include: (i) refundable credits granted during the year under this section or said subsection (g) or said section (6) of said chapter 62; (ii) nonrefundable credits granted during the year under this section or said subsection (g) or said section (6) of said chapter 62 to the extent that such nonrefundable credits are estimated by the commissioner of revenue to offset tax liabilities during the year; and (iii) carryforwards of credits from prior years under this section or said subsection (g) of said section 6 of said chapter 62 to the extent that such credit carryforwards, if any, are estimated by the commissioner of revenue to offset tax liabilities during the year. A portion of the annual cap not awarded by the EACC in a calendar year shall not be applied to awards in a subsequent year.[ First paragraph of subsection (c) as amended by 2024, 238, Secs. 203 and 204 effective November 20, 2024. For text effective until November 20, 2024, see above.](c) The total amount of credits that may be authorized by the EACC in a calendar year pursuant to this section and subsection (g) of section 6 of chapter 62 shall not exceed $30,000,000 annually; provided, however, that the total amount shall not include credits under section 38BB of this chapter or subsection (q) of said section 6 of said chapter 62; and provided further, that the total amount shall include: (i) refundable credits granted during the year under this section or said subsection (g) of said section (6) of said chapter 62; (ii) nonrefundable credits granted during the year under this section or said subsection (g) of said section (6) of said chapter 62 to the extent that such nonrefundable credits are estimated by the commissioner of revenue to offset tax liabilities during the year; and (iii) carryforwards of credits from prior years under this section or said subsection (g) of said section 6 of said chapter 62 to the extent that such credit carryforwards, if any, are estimated by the commissioner of revenue to offset tax liabilities during the year. A portion of the annual cap not awarded by the EACC in a calendar year shall not be applied to awards in a subsequent year.[ Second paragraph of subsection (c) effective until November 20, 2024. For text effective November 20, 2024, see below.]The economic assistance coordinating council shall provide the commissioner of revenue with the documentation that the commissioner deems necessary to confirm compliance with the annual cap and the commissioner shall provide a report confirming compliance to the secretary of administration and finance and the secretary of economic development.[ Second paragraph of subsection (c) as amended by 2024, 238, Sec. 205 effective November 20, 2024. For text effective until November 20, 2024, see above.]The economic assistance coordinating council shall provide the commissioner of revenue with the documentation that the commissioner deems necessary to confirm compliance with the annual cap and the commissioner shall provide a report confirming compliance to the secretary of administration and finance and the secretary of economic development. Notwithstanding section 21 of chapter 62C, the department of revenue shall provide the EACC with documentation confirming credits claimed under this section by a corporation subject to tax under this chapter that is the controlling business of a certified project or an affiliate of a controlling business.[ Third paragraph of subsection (c) effective until November 20, 2024. For text effective November 20, 2024, see below.]The credit allowed under this section may be taken by an eligible corporation; provided, however, that the credit allowed by section 31A or 31H shall not be taken by such a corporation.[ Third paragraph of subsection (c) as amended by 2024, 238, Sec. 206 effective November 20, 2024. For text effective until November 20, 2024, see above.]The credit allowed under this section may be taken by an eligible corporation; provided, however, that the credit allowed by section 31H shall not be taken by such a corporation.(d) A corporation entitled to a credit under this section for a taxable year may, to the extent authorized by the EACC, carry over and apply to the tax liability imposed by this chapter for any of the next succeeding 10 taxable years the portion, as reduced from year to year, of those credits that exceed the tax liability imposed by this chapter for the taxable year; provided, however, that the corporation shall not apply the credit to the tax liability imposed by this chapter for a taxable year beginning more than 5 years after the certified project ceases to qualify as a certified project under chapter 23A; and provided further, that notwithstanding the foregoing, the economic assistance coordinating council may limit or restrict carryover of credits under section 3D of said chapter 23A.(e) If a credit allowed under subsection (b) is designated by the EACC as a refundable credit, the credit shall first be applied against the tax liability of the corporation under this chapter and 100 per cent of the balance of the credit may, at the option of the corporation and to the extent authorized by the EACC, be refundable to the corporation. In each case, the EACC shall specify the timing of the refund which may be for the taxable year in which all or a portion of the certified project is placed in service or the taxable year subsequent to the year in which the required jobs are created. If the credit balance is refunded to the corporation, the credit carryover provisions of subsection (d) shall not apply.(f) If a corporation is subject to a minimum excise under this chapter, the amount of the credit allowed by this section shall not reduce the excise to an amount less than the minimum excise.(g) If corporations file a combined return of income under section 32B, a credit generated by an individual member corporation under this section shall first be applied against the separately determined excise attributable to that member except as otherwise provided in this section. A member corporation with an excess credit may apply its excess credit against the excise of another group member to the extent that the other member corporation can use additional credits. An unused, unexpired credit generated by a member corporation shall be carried over from year to year by the individual corporation that generated the credit to the extent authorized by the EACC.(h) The commissioner of revenue may promulgate rules and regulations necessary to implement this section including, but not limited to, provisions to prevent the generation of multiple credits with respect to the same property.[ Subsection (i) effective until November 20, 2024. For text effective November 20, 2024, see below.](i) If the EACC revokes the certification of a project under section 3F of chapter 23A, a portion of the tax credit otherwise allowed by this section and claimed by the corporation prior to the date on which the EACC makes the determination to revoke its certification of the project shall be added back as additional tax due and shall be reported as such on the return of the corporation for the taxable period in which the EACC makes the determination to revoke the certification of the project. The amount of credits subject to recapture shall be proportionate to the corporation's compliance with the job creation requirements applicable to the certified project. The corporation's proportion of compliance shall be determined by the EACC as part of its revocation process and shall be reported to the corporation and the department of revenue at the time certification is revoked.[ Subsection (i) as amended by 2024, 238, Sec. 207 effective November 20, 2024. For text effective until November 20, 2024, see above.](i) If the EACC revokes the certification of a project under section 3F of chapter 23A, a portion of the tax credit otherwise allowed by this section and claimed by the corporation prior to the date on which the EACC makes the determination to revoke its certification of the project shall be added back as additional tax due and shall be reported as such on the return of the corporation for the taxable period in which the EACC makes the determination to revoke the certification of the project. The amount of credits subject to recapture shall be proportionate to the corporation's compliance with the job creation requirements applicable to the certified project. The amount of credits subject to recapture shall be equal to the corporation's proportion of compliance, as determined by the EACC as part of its revocation process and reported to the corporation and the department of revenue at the time certification is revoked.(j) If a certified project is sold or otherwise disposed of, a tax credit allowed under this section may be transferred to the purchaser of the certified project; provided, however, that the EDIP contract shall be assigned to and assumed by the purchaser of the certified project and the assignment and assumption shall be approved in writing by the EACC.(k) Nothing in this section shall limit the authority of the commissioner of revenue to make an adjustment to a corporation's liability upon audit.