2011 Kentucky Revised Statutes Subchapter 23 Economic Development Projects in Qualified Zones 154.23.040 Service and technology agreements -- Time limits for meeting minimum investment and employment requirements -- Inducements during term of agreements -- Suspension or termination of inducements -- Approved costs -- Reduction of inducements.
KY Rev Stat § 154.23.040 (1996 through Reg Sess) What's This?
154.23-040 Service and technology agreements -- Time limits for meeting minimum
investment and employment requirements -- Inducements during term of
agreements -- Suspension or termination of inducements -- Approved costs -Reduction of inducements.
(1)
Before any approved company engaged in service or technology activity is granted
inducements under KRS 154.23-005 to 154.23-079, a service and technology
agreement with respect to the approved company’s economic development project
shall be entered into between the authority and the approved company. The terms
and provisions of the service and technology agreement, including the amount of
approved costs, shall be determined by negotiations between the authority and the
approved company, subject to inclusion of the following mandatory provisions:
(a) The term of the service and technology agreement shall commence upon the
activation date and shall 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.
(b) The service and technology 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 service and technology
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 service and
technology 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 service and
technology agreement, then the approved company shall be ineligible to
receive inducements under this subchapter unless an extension is approved by
the authority.
(c) In order to implement the activation date, the approved company shall notify
the authority, the Kentucky Department of Revenue, the qualified statewide
employees, and the affected local jurisdictions, if any, of the activation date on
which implementation of the inducements authorized in the service and
technology agreement shall occur;
(d) The approved company may be permitted the following inducements during
the term of the service and technology agreement:
1.
A tax credit of up to one hundred percent (100%) of the Kentucky
income tax liability imposed by KRS 141.020, 141.040, and the limited
liability entity tax imposed by KRS 141.0401 that would otherwise be
due, determined under KRS 141.401, on the income, Kentucky gross
receipts, or Kentucky gross profits of the approved company generated
by or arising out of the economic development project, as limited by the
(2)
(3)
(4)
(5)
(6)
provisions of this section and KRS 154.23-045. The ordering of the
credits shall be as provided in KRS 141.0205; and
2.
The assessment, if applicable, withheld by the approved company in
each year;
(e) The inducements allowed to the approved company shall be subtracted from
the approved cost balance in the fiscal year of the approved company for
which the tax return of the approved company is filed;
(f) If the total number of full-time qualified employees at the site of the economic
development project is less than ten (10) or, in the case of an existing
business, the approved company fails to maintain the increase of at least ten
(10) full-time qualified employees, 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;
(g) The service and technology agreement may be assigned by the approved
company only upon the prior written consent of the authority; and
(h) The approved company shall pay all costs of counsel to the authority resulting
from approval of its economic development project.
Before the end of the first year following the activation date, the authority shall,
using data supplied by the approved company, verify and determine the total startup costs for the approved company’s economic development project. The initial
approved costs shall be up to a maximum of fifty percent (50%) of the start-up
costs.
Each year, during the ten (10) year term of the service and technology agreement,
up to fifty percent (50%) of the annualized rent shall be added to the unrecouped
balance of approved costs, and the inducements earned shall be subtracted from the
approved costs.
If, in any fiscal year of the approved company during which the service and
technology agreement is in effect, the accumulated inducements equal the
unrecouped remaining balance of the approved costs then expended, the
assessments collected from the wages of the employees shall cease for the
remainder of that fiscal year of the approved company, and the approved company
shall resume normal personal income tax and occupational license fee withholdings
from the qualified statewide employees’ wages for the remainder of that fiscal year.
If, in any fiscal year of the approved company during which the service and
technology agreement is in effect, the total of the income tax credit granted to the
approved company plus the assessment collected from the wages of the qualified
statewide employees exceeds the remaining balance of the approved costs then
expended, the approved company shall pay the excess to the Commonwealth as
income tax.
If, in any fiscal year of the approved company during which the service and
technology agreement is in effect, the assessment collected from the wages of the
qualified statewide employees exceeds the unrecouped remaining balance of the
approved costs then expended, the assessment collected from the wages of the
qualified statewide employees shall cease for the remainder of that fiscal year of the
approved company, the approved company shall resume normal personal income
tax and occupational license fee withholdings from the qualified statewide
employees for the remainder of that fiscal year, and the approved company shall
remit to the Commonwealth and applicable local jurisdictions their respective
shares of the excess assessment collected on the withholding filing date for
qualified statewide employees’ wages next succeeding the first date when the
approved company collected excess assessments.
Effective: June 28, 2006
History: Amended 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 48, effective June 28,
2006. -- Amended 2005 Ky. Acts ch. 85, sec. 578, effective June 20, 2005. -Amended 2004 Ky. Acts ch. 105, sec. 8, effective July 13, 2004. -- Created 2000 Ky.
Acts ch. 528, sec. 8, 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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