SENATE BILL NO. 149
AS AMENDED BY
SENATE AMENDMENT NO. 1
AN ACT TO AMEND TITLE 30 OF THE DELAWARE CODE RELATING TO TAX CREDITS.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE :
WHEREAS, Delaware prides itself on its ability to grow its economy by creating and nurturing a favorable environment for business; and
WHEREAS, the General Assembly recognizes that Delaware possesses a strategic geographical location and an infrastructure and workforce uniquely able to attract, retain, and support the growth of new economy knowledge-based jobs vital to its ability to compete in the global economy; and
WHEREAS, the General Assembly desires to encourage the long-term development of new, high-wage employment in vital sectors in the global economy; and
WHEREAS, the General Assembly believes that one way to create such new employment is by creating financial incentives to retain, attract and support the sustained growth of knowledge-based businesses in the global economy;
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:
Section 1. Amend Chapter 20, Title 30 of the Delaware Code by adding a new Subchapter IX to read as follows:
“Subchapter IX. New Economy Jobs Program credits
§ 2080. Declaration of Purpose.
The purpose of this subchapter shall be to create incentives for new Delaware employment for the most qualified individuals working in the forefront of traditional and emerging business competition.
§ 2081. Definitions.
As used in this subchapter:
‘Affiliated Group’ has the meaning provided by § 1504 of the Internal Revenue Code [26 U.S.C. § 1504], but including for this purpose Pass Through Entities, as defined in Title 30 Del.C. § 1601 that would be includible if they were classified as corporations, the equity interests in which would be treated as stock, and the ownership of such interests would satisfy the stock ownership requirements of the said § 1504.
‘Base year’ shall mean the calendar year immediately preceding a qualified employer’s first certified year.
‘Brownfield’ shall have the meaning set forth in § 9103 of Title 7 of the Delaware Code.
‘Certified’, ‘Certification’, or ‘recertification’ mean or refer in their context to the first written determination of the Secretary issued to an employer that it is a qualified employer pursuant to the provisions of this subchapter, or the Secretary’s annual review of that written determination.
‘Certified year’ shall mean a calendar year for which an employer is certified to be eligible for New Economy Jobs Program credits under this subchapter.
‘Compensation’ means that part of the sum reported on Form W-2, or equivalent form of the United States Department of Treasury, Internal Revenue Service as “Medicare wages and tips” that is attributable to Delaware sources.
‘Credit’ means a reduction of the final balance for tax or fees reported due by a qualified employer on a tax or information return pursuant to the New Economy Jobs Program.
‘Director’ means the Director of the Delaware Economic Development Office” as defined at Title 29 Del.C. § 5002(c).
‘Eligible Job’ means any single position held by a common-law employee in this State for which the compensation equals or exceeds the salary threshold. More than one consecutive employee may perform an eligible job during a single calendar year so long as the total compensation of all consecutive employees performing such eligible jobs during such calendar year equals or exceeds the salary threshold.
‘Incorporated Municipality’ means and includes the area within the January 1, 2007, boundaries of cities, towns and villages created under any general or special law of this State for general governmental purposes which possess legislative, administrative and police powers for the general exercise of municipal functions and which carry on such functions through a set of elected and other officials.
‘Inflation adjustment factor’ means an amount equal to the Consumer Price Index prepared by the Bureau of Labor Statistics, U.S. Department of Labor for urban consumers, U.S. city average, all items, that corresponds to the calendar year for which the credit is calculated divided by the equivalent Consumer Price Index figure for the calendar year in which this Act takes effect. Final calculations of the inflation adjustment factor for a calendar year shall be based on data available April 1 of the following calendar year.
‘New Economy Jobs Program’ means the program authorized pursuant to this Subchapter to encourage the creation of high wage, knowledge-based jobs in this State.
‘Qualified Employee’ means a common-law employee employed in an eligible job in this State.
‘Qualified Employer’ means an employer certified to be eligible for New Economy Jobs Program credits under this subsection
‘Qualified Withholding Payments’ means (subject to the limitations of Section 2084 of this Chapter) the total amount of tax withheld, accounted for, and paid to the Secretary pursuant to Title 30 of the Delaware Code, Chapter 11, Subchapter VII by a Qualified Employer on account of the compensation paid so many of the Qualified Employees as are counted in determining New Economy Program credits.
‘Salary threshold’ means the amount of Delaware sourced compensation paid to a common law employee, rounded to the nearest $100, calculated by multiplying $100,000 times the inflation adjustment factor.
‘Secretary’ means the individual appointed as administrator and head of the Delaware Department of Finance pursuant to Title 29, Del.C. §8302.
‘Targeted Growth Area’ means a geographic area designated as “investment level 1” or “investment level 2” on the Strategy Maps of the most recent Executive Order approving the Strategies for State Policies and Spending, originally approved in December, 1999.
‘Targeted Growth County’ means a County in this State having, at the time of the effective date of this Act, fewer than 250,000 inhabitants as reported in the most recent County Population Estimate of the United States Department of Commerce, Bureau of Census.
§ 2082. Certification as a Qualified Employer; recertification.
(a) Application for certification as a qualified employer will be made to the Secretary with a copy to the Director.
(b) The Secretary shall annually review the certification of qualified employers for eligibility for New Economy Jobs Program credits before credits are allowed.
(c) Credits allowable during the first certified year will be pro-rated upon the basis of the number of months before and after certification.
(d) For any single calendar year subsequent to its first certified year in which a qualified employer hires and employs no fewer than fifty additional qualified employees in new eligible jobs, the qualified employer may (i) elect to treat such additional qualified employees either as an addition to its existing number of qualified employees under its existing certification, or (ii) make a separate application pursuant to this section and § 2083 for certification and credits with respect to such additional qualified employees.
§ 2083. Credits for New Economy Jobs Program employment.
(a) Subject to the limitations contained in Section 2084 and to such return requirements as may be imposed by the Delaware Bank Commissioner, Delaware Insurance Commissioner, or the Secretary, qualified employers shall be eligible during its first certified year and for the nine taxable years thereafter for credits against the taxes and/or fees imposed by the following statutory provisions:
(1) Chapter 11 of Title 5;
(2) Sections 702 and 703 of Title 18;
(3) Chapter 19 of Title 30;
(4) Other fees and taxes imposed under Title 30.
The amount of credit shall be determined under subsections (b) and (c) of this section. Credits under this section shall be taken by the qualified employer against taxes in the order specified in this subsection and to the extent thereof.
(b) Credits based on minimum and additional employment.
(1) Subject to the limitations herein and in § 2084, in the case of a qualified employer which employs in a certified year no fewer than fifty qualified employees in excess of the number of its qualified employees during its base year, the credit granted under subsection (a) shall be that product determined by multiplying
(A) X, where “X” equals the total of its qualified withholding payments on the compensation of its qualified employees hired and employed after the base year in new eligible jobs, by
(B) The credit percentage, which shall consist of the sum of the following:
i. 25%, plus
ii. 0.075% for each qualified employee (in excess of fifty more than the number of qualified employees employed during its base year) hired and employed in new eligible jobs.
(2) In no case shall the total credit available under this subsection exceed 40% times X .
(c) Additional credit based on geographic employment.
In addition to the credits determined on the qualified withholding payments for qualified employees identified under subsection (b), a qualified employer may claim additional credits determined by:
(1) multiplying Y-1 times ten percent (10%), where “Y-1” equals the total of the qualified withholding payments on the compensation of such qualified employees identified to be employed in new eligible jobs in an incorporated municipality or a targeted growth area,
(2) multiplying Y-2 times five percent (5%), where “Y-2” equals the total of the qualified withholding payments on the compensation of such qualified employees identified to be employed in new eligible jobs in a reclaimed Brownfield in which the qualified employer is the first tenant, and
(3) multiplying Y-3 times ten percent (10%), where “Y3” equals the total of
§ 2084. Limitation on credits and qualified withholding payments.
Notwithstanding Section 2083,
(a) the total amount of New Economy Jobs Program credit allowable under this subchapter for any qualified employer during any calendar year shall not exceed sixty-five (65%) percent of its qualified withholding payments;
(b) if the Secretary finds that a qualified employer’s qualified withholding payments unreasonably exceed the amount of tax required to be withheld, accounted for, and paid by a taxpayer to the Secretary pursuant to Title 30 of the Delaware Code, Chapter 11, Subchapter VII, the Secretary may limit such qualified withholding payments to an amount which is reasonable. The Secretary or the Secretary’s delegate shall mail written notice of such determination to the taxpayer. The taxpayer may, within 30 days of the date of mailing such notice, institute a written protest of such finding to the Secretary in the manner provided under § 523 of this Title for protests of assessments. The Secretary’s determination of the protest shall be final;
(c) no qualified employees counted for purposes of claiming New Economy Jobs Program credits under this Subchapter may be included in the calculation of employment for purposes of claiming tax credits provided by Title 30 of the Delaware Code, Chapter 20, Subchapters II and III;
(d) no qualified employee in any certified year who was employed in Delaware in the base year by a member of an affiliated group which conducted or conducts business in this State during the base year or any year thereafter shall be counted as newly hired or employed qualified employees or qualified employees in new eligible jobs for purposes of calculating the New Economy Jobs Program credits under this Subchapter; and
(e) no more than 10% of the total number of qualified employees counted for purposes of claiming New Economy Jobs Program credits under this Subchapter may be individuals who were required by the provisions of Chapter 11, Title 30 of the Delaware Code to file a personal income tax return for the base year.
§ 2085. Disposition of unused credits. To the extent a qualified employer’s New Economy Jobs Program credits exceed any amounts otherwise due for the taxes and fees listed under section 2083(a) but do not exceed the limitation of Section 2084, such unused credits shall be paid to it in the nature of tax refunds.
§ 2086. Sunset Date. This Act shall apply to qualified employers whose first certified year commences prior to January 1, 2014.”
Section 2. Amend 30 DelC. §2010 (4) and §2010 (5) by deleting the date “January 31, 2007” and substituting in lieu thereof the following date: “June 30, 2009”.
Section 3. This Act shall be effective for Qualified Withholding Payments received by the State after enactment
Approved June 30, 2007