§ 42-64.5-7. Business reorganizations.
(a) If:
(i) An eligible company (hereinafter referred to as the "resulting company�) continues,
succeeds to, or acquires all or substantially all of the business of one or more eligible
companies including all of its eligible subsidiaries (each such eligible company,
together with its eligible subsidiaries being hereinafter referred to as a "combining
company�), whether by consolidation, merger, stock acquisition, asset acquisition,
or other method of business combination;
(ii) At least one of the combining companies has previously established a base employment
date; and
(iii) The resulting company elects to have this section apply,
then the following rules shall apply for purposes of determining the rate reduction
applicable to the resulting company. The resulting company, if in existence prior
to the combination, is also a combining company.
(1) The "reference company� shall be the combining company which has a previously established
base employment date and which, for its last taxable year ending before the combination,
had the highest number of units of new employment; provided, that for purposes of
making this determination only, no combining company shall be treated as a small business
concern. If more than one of the combining companies having previously established
base employment dates had the highest number of units of new employment, the reference
company shall be the one of those companies that has the largest total employment
before the combination.
(2) The resulting company may claim a rate reduction, and the base employment of the resulting
company shall be the base employment of the reference company plus, for each other
combining company, the greatest of: (i) if the combining company had a previously
established base employment date, its base employment; (ii) the base employment determined
as of the base employment date of the reference company; and (iii) its adjusted current
employment for its most recently completed taxable year. The initial new employment
level of the resulting company shall be the initial new employment level of the reference
company plus, for each other combining company, the greater of: (i) the combining
company's previously established initial new employment level, if any; and (ii) its
adjusted current employment for its most recently completed taxable year.
(3) The resulting company shall be a small business concern only if: (A) the sum of: (i)
for each combining company that has a previously established base employment date,
the greater of its base employment level or its base employment level determined as
of the base employment date of the reference company, plus (ii) for each other combining
company, the greater of its base employment level determined as of the base year of
the reference company or its total employment immediately prior to the combination
is less than one hundred (100); and (B) the resulting company is not a telecommunications
company.
(4) If, for the year in which the combination occurs or for either of the next two (2)
taxable years thereafter, the resulting company's units of new employment is less
than its initial new employment level, the resulting company shall compute and pay
applicable taxes as though this chapter did not apply for such year. If the restoration
condition described in paragraph (6) is satisfied, the resulting company shall be
entitled to a credit or refund equal to the sum of the amount actually paid by the
resulting company over:
(i) For the taxable year in which the combination occurred, the tax that would have been
paid at the rate last previously determined for the reference company, plus, for each
other combining company that had a previously established initial employment level,
an amount equal to the product of the combining company's taxable income for its last
prior taxable year before the combination (but not less than zero) times the difference
in the tax rate established for that combining company over the tax rate established
for the reference company; provided, however, that the tax on the resulting company
shall not be higher than the tax that would result if this chapter did not apply;
and
(ii) For the first or second taxable year beginning after the combination, the tax that
would have been paid if using a rate reduction equal to one-quarter of one percent
(0.25%) times the number of units of new employment for that taxable year (but not
in excess of the resulting company's initial new employment level).
(5) For each taxable year thereafter, the resulting company's rate reduction shall be
the same as the reference company's rate reduction before the combination; provided,
that if for any such succeeding taxable year the resulting company's number of units
of new employment is less than its initial new employment level, the rate reduction
provided for in this chapter shall expire permanently.
(6) The restoration condition shall be satisfied if: (i) by the last month of the second
taxable year beginning after the combination, the resulting company's units of new
employment equals or exceeds its initial new employment level; and (ii) for a twelve-month
(12) period (which may be selected after the end of such period by the resulting company)
that includes the last month of the second taxable year beginning after the combination,
the resulting company's adjusted current employment (measured over such twelve-month
(12) period) equals or exceeds its initial new employment level.
(7) A resulting company may elect to have this subsection (a) apply only if the reference
company's number of units of new employment for its last taxable year ending before
the date of the combination is not less than the reference company's initial new employment
level.
(b) If an eligible company (hereinafter referred to as the "acquiring company�) acquires
an eligible subsidiary, division, or other unit of another eligible company (hereinafter
referred to as the "divesting company�) that does not represent all or substantially
all of the business of the divesting company and its eligible subsidiaries, the acquiring
company and the divesting company may elect to determine any rate reduction applicable
to the acquiring company and the divesting company after the date of the acquisition
in accordance with the following:
(1) If the acquiring company has previously established a base employment level:
(A) The base employment, if any, of the divesting company shall be the lesser of its base
employment before the divestment and its total employment immediately after the divestment;
and
(B) If the base employment of the divesting company is reduced by reason of the rule stated
in (A), the base employment of the acquiring company shall be increased by an equal
amount.
(2) If the acquiring company has not previously established a base employment level, the
base employment of the divesting company, if any, shall be unaffected.
(3) The acquiring company and the divesting company shall jointly make the election in
such form as the tax administrator may require, and, once filed by either company,
the election shall be irrevocable.