§ 57-38-01.41 — Twenty-first century manufacturing and animal agricultural workforce incentive

North Dakota § 57-38-01.41

• Jurisdiction: North Dakota
• Title 57: Taxation
• Ch. 57-38: Income Tax

Text

incentive.
1. A taxpayer that is a primary sector business is allowed a nonrefundable credit against
the tax imposed under section 57-38-30 or 57-38-30.3 for purchases of qualifying
machinery and equipment in this state to improve job quality or increase productivity.
The amount of the credit under this section is fifteen percent of the cost of the
qualifying machinery and equipment purchased in the taxable year. Qualified
expenditures under this section may not be used in the calculation of any other income
tax deduction or credit allowed under this chapter.
2. For purposes of this section:
a. "Animal agricultural machinery and equipment" means new or used automation
and robotic equipment used to upgrade or advance an animal agricultural
process. The term does not include replacement automation and robotic
equipment that does not upgrade or advance an animal agricultural process.
b. "Animal agricultural process" means the breeding, raising, harvesting, or
processing of animals for producing meat, dairy, or eggs, or meat, dairy, or egg
products. For purposes of this subdivision, "animal" means beef or dairy cattle,
swine, sheep, goats, bison, farmed elk, or poultry.
c. "First-time claimant" means a taxpayer that has not previously claimed a credit
against the tax imposed under section 57-38-30 or 57-38-30.3 for purchases of
animal agricultural machinery and equipment or manufacturing machinery and
equipment for the purpose of automating manufacturing or animal agricultural
processes.
d. "Improved job quality" means a five percent increase in average wages or a five
percent improvement in workplace safety as documented through participation in
workforce safety and insurance safety incentive programs.
e. "Increased productivity" means no less than a five percent increase in output or a
five percent increase in the number of units produced per automated line per time
period.
f. "Manufacturing machinery and equipment" means new or used automation and
robotic equipment used to upgrade or advance a manufacturing process. The
term does not include replacement automation and robotic equipment that does
not upgrade or advance a manufacturing process.
g. "Primary sector business" has the meaning provided in section 1-01-49.
h. "Purchase" includes qualifying machinery and equipment acquired under a capital
lease only for the taxable year in which the lease is executed. A capital lease is a
lease which meets generally accepted accounting principles. The qualifying costs
of the equipment acquired under a capital lease is the fair market value of the
equipment at the inception of the lease.
i. "Qualifying machinery and equipment" means animal agricultural machinery and
equipment and manufacturing machinery and equipment for the purpose of
automating manufacturing or animal agricultural processes.
3. The taxpayer shall claim the total credit amount for the taxable year in which the
qualifying machinery and equipment are purchased. The credit under this section may
not exceed the taxpayer's liability as determined under this chapter for any taxable
year.

4. If the amount of the credit determined under this section exceeds the liability for tax
under this chapter, the excess may be carried forward to each of the next five
succeeding taxable years.
5. a. The aggregate amount of credits allowed each calendar year under this section
may not exceed three million dollars.
(1) From the aggregate credit limit in this subdivision, the tax commissioner
shall designate:
(a) Five hundred thousand dollars for credits claimed by first-time
claimants for animal agricultural machinery and equipment for the
purpose of automating animal agricultural processes; and
(b) Five hundred thousand dollars for credits claimed by first-time
claimants for manufacturing machinery and equipment for the purpose
of automating manufacturing processes.
(2) If the portion of the aggregate limit which is designated for first-time
claimants in paragraph 1 is greater than the amount of credits claimed by
the corresponding first-time claimants, the remaining portion of the
aggregate limit which is designated for the first-time claimants in
paragraph 1 must be included in the amount available to claimants that are
not first-time claimants.
(3) If the portion of the aggregate limit which is not designated for first-time
claimants in paragraph 1 is greater than the amount of credits claimed by
claimants that are not first-time claimants, the remaining portion of the
aggregate limit which is not designated for first-time claimants in
paragraph 1 must be included in the amount available to first-time claimants
to the extent necessary to satisfy all first-time claims.
(4) If the sum of the portion of the aggregate limit which is designated for the
corresponding first-time claimants in paragraph 1 and any amount available
to the first-time claimants under paragraph 3 is less than the amount of
credits claimed by the first-time claimants, the tax commissioner shall
prorate the credits among the first-time claimants.
b. If the maximum amount of allowed credits are not claimed in any calendar year,
any remaining unclaimed credits may be carried forward and made available in
the next succeeding calendar year.
c. After determining the credits claimed by the first-time claimants as provided in
subdivision a, if the aggregate amount of credits claimed under this section by
claimants that are not first-time claimants exceeds the amount available to
claimants that are not first-time claimants in a calendar year, the tax
commissioner shall prorate the credits among the claimants that are not first-time
claimants.
6. If a taxpayer entitled to the credit provided by this section is a member of a group of
corporations filing a North Dakota consolidated tax return using the combined
reporting method, the credit may be claimed against the aggregate North Dakota tax
liability of all the corporations included in the North Dakota consolidated return.
7. A passthrough entity entitled to the credit under this section must be considered to be
the taxpayer for purposes of calculating the credit. The amount of the allowable credit
must be determined at the passthrough entity level. The total credit determined at the
entity level must be passed through to the partners, shareholders, or members in
proportion to their respective interests in the passthrough entity. An individual taxpayer
may take the credit passed through under this subsection against the individual's state
income tax liability under section 57-38-30.3.
8. The department of commerce shall provide the tax commissioner the name, address,
and federal identification number or social security number of the taxpayer approved
as qualifying for the credit under this section, and a list of those items approved as a
qualified expenditure by the department. The taxpayer claiming the credit shall file with
the taxpayer's return, on forms prescribed by the tax commissioner, the following
information:

a. The name, address, and federal identification number or social security number
of the taxpayer that made the purchase; and
b. An itemization of:
(1) Each item of machinery or equipment purchased for automation, including a
description of the equipment or system being upgraded or advanced, and an
explanation of how the upgrade or advancement will improve job quality or
increase productivity;
(2) The amount paid for each item of machinery or equipment if the amount
paid for the machinery or equipment is being used as a basis for calculating
the credit; and
(3) The date on which payment for the purchase was made.
9. Within one year after claiming a tax credit under this section, a taxpayer shall file with
the tax commissioner a report that documents the improved job quality or increased
productivity required under this section and any other information the tax
commissioner determines is necessary for administration of this section. Failure to
document the improved job quality or increased productivity requirements is cause to
disallow the credit attributable to the noncompliance. The tax commissioner shall
provide notice of the disallowed credit to the taxpayer. Within ninety days after the date
of the notice, the taxpayer shall file an amended return for each taxable year in which
the disallowed credit reduced the taxpayer's tax liability and pay the amount due. If an
amended return is not filed timely, the tax commissioner shall disallow the credit and
assess any tax due. An assessment of tax made under this subsection is final and
irrevocably fixed.
10. Notwithstanding the time limitations contained in section 57-38-38, this section does
not prohibit the tax commissioner from conducting an examination of the credit claimed
and assessing additional tax due under section 57-38-38.