2011 Kentucky Revised Statutes Subchapter 23 Economic Development Projects in Qualified Zones 154.23.035 Tax incentive agreements between authority and approved companies -- Time limits -- Tax credits and assessments as inducements for approved companies -- Assignment of tax incentive agreement -- Documentation of expenditures -- Suspension of inducements -- Authority's remedies in case of failure to comply -- Activation date -- Costs of counsel.
KY Rev Stat § 154.23.035 (1996 through Reg Sess) What's This?
154.23-035 Tax incentive agreements between authority and approved companies - Time limits -- Tax credits and assessments as inducements for approved
companies -- Assignment of tax incentive agreement -- Documentation of
expenditures -- Suspension of inducements -- Authority's remedies in case of
failure to comply -- Activation date -- Costs of counsel.
The authority, upon adoption of an authorizing resolution, may enter into a tax incentive
agreement with any approved company engaged in manufacturing activities with respect
to its economic development project. The terms and provisions of each tax incentive
agreement, including the amount of approved costs, shall be determined by negotiations
between the authority and the approved company, subject to the inclusion of the
following mandatory provisions:
(1) The tax incentive agreement shall set forth the maximum amount of inducements
available to the approved company for recovery of the approved costs authorized by
the authority and expended by the approved company.
(2) The approved company shall expend the authorized approved costs within three (3)
years of the date of the final approval by the authority.
(3) The approved company shall provide the authority with documentation as to the
expenditures for approved costs in a manner acceptable to the authority.
(4) The term of the tax incentive agreement shall commence upon the activation date
and will terminate upon the earlier of the full receipt of the maximum amount of
inducements by the approved company or ten (10) years after the activation date.
(5) The tax incentive agreement shall include the activation date, which shall be a date
selected by the approved company within two (2) years of the date of final approval
by the authority of the tax incentive agreement. If the approved company does not
satisfy the minimum investment and minimum employment requirements of KRS
154.23-025 by the activation date, the approved company shall not be entitled to
receive inducements pursuant to this subchapter until the approved company
satisfies the requirements; however, the ten (10) year period for the term of the tax
incentive agreement shall begin from the activation date. Notwithstanding the
previous sentence, if the approved company does not satisfy the minimum
investment and minimum employment requirements of KRS 154.23-025 within two
(2) years from the date of final approval of the tax incentive agreement, then the
approved company shall be ineligible to receive inducements under this subchapter
unless an extension is approved by the authority.
(6) The approved company shall comply with the hourly wage criteria set forth in KRS
154.23-025(4) and provide documentation in connection with hourly wages paid to
its full-time employees hired as a result of the economic development project in a
manner acceptable to the authority.
(7) The approved company may be permitted the following inducements during the
term of the tax incentive agreement:
(a) A one hundred percent (100%) credit against the Kentucky income tax and the
limited liability entity tax imposed under KRS 141.0401 that would otherwise
be owed in the approved company’s fiscal year, as determined under KRS
(8)
(9)
(10)
(11)
(12)
(13)
(14)
141.401, to the Commonwealth by the approved company on the income,
Kentucky gross profits, or Kentucky gross receipts of the approved company
generated by or arising from the economic development project. The ordering
of the credits shall be as provided in KRS 141.0205; and
(b) The aggregate assessments withheld by the approved company each year.
The total inducements may not exceed authorized cumulative approved costs paid
by the approved company in the three (3) year period commencing with and after
the date of final approval.
The tax credited to the approved company shall be credited for the fiscal year for
which the tax return of the approved company is filed. The approved company shall
not be required to pay estimated income tax payments as prescribed in KRS
141.042 on the Kentucky taxable income, Kentucky gross receipts or Kentucky
gross profits generated by or arising from the economic development project.
The tax incentive agreement may be assigned by the approved company only upon
the prior written consent of the authority following the adoption of a resolution by
the authority to that effect.
The tax incentive agreement shall provide that if the total number of full-time
qualified employees at the site of the economic development project is less than ten
(10), the authorized inducements shall be suspended for a period of up to one (1)
year. If the company does not have at least ten (10) new full-time qualified
employees at the site within one (1) year from the date of the initial suspension, the
inducements may be terminated at the discretion of the authority.
The tax incentive agreement shall provide that if an approved company fails to
comply with its obligations under the tax incentive agreement then the authority
shall have the right, at its option, to:
(a) Suspend the tax credits and assessments available to the approved company,
pursuant to subsection (11) of this section;
(b) Pursue any remedy provided under the tax incentive agreement, including
termination thereof; and
(c) Pursue any other remedy at law to which it may be entitled.
All remedies provided in subsection (12) of this section shall be deemed to be
cumulative.
The approved company shall pay all costs of counsel to the authority resulting from
approval of its economic development project.
Effective: June 28, 2006
History: Amended 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 47, effective June 28,
2006. -- Amended 2004 Ky. Acts ch. 105, sec. 7, effective July 13, 2004. -- Amended
2002 Ky. Acts ch. 338, sec. 29, effective July 15, 2002. -- Created 2000 Ky. Acts
ch. 528, sec. 7, effective July 14, 2000.
Legislative Research Commission Note (6/28/2006). 2006 (1st Extra Sess.) Ky. Acts
ch. 2, sec. 73, provides that "unless a provision of this Act specifically applies to an
earlier tax year, the provisions of this Act shall apply to taxable years beginning on or
after January 1, 2007."
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