FEATURE ARTICLE

Fake

Fake "Job" Bill (Arizona Economic Development Authorities)
 
Sierra Hancock 
Date: 01-04-2011
Subject: Arizona Laws and Arizona Founding Documents

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_________ Legislature                                                                                                                                                   ________________________ Session                                                                                                                                                     _.B. _____Section 1.  Section 20-224.03, Arizona Revised Statutes, is amended to read:

START_STATUTE20-224.03.  Premium tax credit for increased employment; definition

A.  A tax credit is allowed against the premium tax liability incurred by an insurer that meets the requirements as an Arizona basic enterprise, as defined in section 41-1525, pursuant to section 20‑224, 20‑837, 20‑1010, 20‑1060 or 20‑1097.07 for net increases in full-time employees hired in qualified employment positions of residents of this state by an insurer that is located in an enterprise zone established under title 41, chapter 10, article 2 as certified by the department of commerce pursuant to section 41‑1525.  A tax credit is not allowed for the portion of the tax payable to the fire fighters' relief and pension fund pursuant to section 20‑224 or the portion of the tax payable to the public safety personnel retirement system pursuant to section 20‑224.01.  Subject to subsection D of this section, the amount of the tax credit is equal to three thousand dollars for each full‑time employee hired by an Arizona basic enterprise, as defined in section 41‑1525, for the full taxable year in a qualified employment position in each of the first three years of employment.

1.  One‑fourth of the taxable wages paid to an employee in a qualified employment position, not to exceed five hundred dollars, in the first year or partial year of employment.

2.  One‑third of the taxable wages paid to an employee in a qualified employment position, not to exceed one thousand dollars per qualified employment position, in the second year of continuous employment.

3.  One‑half of the taxable wages paid to an employee in a qualified employment position, not to exceed one thousand five hundred dollars per qualified employment position, in the third year of continuous employment.

B.  To qualify for a credit under this section:

1.  An insurer must:

(a)  Relocate its operation from outside this state to a location in this state or expand its in-state operation.

(b)  Create at least twenty-five new full-time employment positions in a city or town with a population of fifty thousand persons or more or at least fifteen new full-time employment positions in any other location.

1.  2.  All of the employees with respect to whom a credit is claimed must reside in this state.

2.  3.  Thirty‑five per cent of the employees with respect to whom a credit is claimed for the first year of employment must reside on the date of hire in an enterprise zone that is located in the same county in which the insurer is located.  If an employee for whom a credit was allowed in the first year of employment leaves employment during the second or third year, the taxpayer may substitute another employee who meets the requirements of paragraph 4 of this subsection and who was hired during the same year as the original employee.  If the original employee was counted toward the residency requirement under this paragraph, the substitute employee must also have resided in a zone at the time the substitute was hired.

3.  4.  A qualified employment position must meet all of the following requirements:

(a)  The position must be a minimum of one thousand seven hundred fifty hours per year of full‑time and permanent employment.

(b)  The job duties must be performed primarily at the zone locations of the business location.  If an eligible employee in a qualified employment position is transferred or assigned to work in the taxpayer's workplace at a different location that is also located in an enterprise zone and qualifies as a zone location, it may be considered to be continuous employment if it continues to meet all qualified employment position requirements.

(c)  The employment must include health insurance coverage for the employee for which the employer pays at least fifty sixty‑five per cent of the premium or membership cost. If the taxpayer is self‑insured, the taxpayer must pay at least fifty sixty‑five per cent of a predetermined fixed cost per employee for an insurance program that is payable whether or not the employee has filed claims.

(d)  The employer must pay compensation at least equal to the median wage offer by county as computed annually by the department of economic security research administration divisionCOMMERCE.

(e)  The employee must have been employed for at least ninety days during the first taxable year.  An employee who is hired during the last ninety days of the taxable year shall be considered a new employee during the next taxable year.  A qualified employment position that is filled during the last ninety days of the taxable year is considered to be a new qualified employment position for the next taxable year.

(f)  The employee has not been previously employed by the taxpayer within twelve months before the current date of hire.

C.  A credit is allowed for employment in the second and third year only for qualified employment positions for which a credit was allowed in the first year.

D.  The net increase in the number of qualified employment positions is the lesser of the total number of filled qualified employment positions created in the zone during the tax year or the difference between the average number of full‑time employees in the zone in the current tax year and the average number of full‑time employees during the immediately preceding taxable year. The net increase in the number of qualified employment positions computed under this subsection may not exceed two hundred qualified employment positions per taxpayer each year.

E.  A taxpayer who claims a credit under section 20‑224.04 shall not claim a credit under this section with respect to the same employees.

F.  Pursuant to subsection A of this section, if the allowable tax credit exceeds the state premium tax liability, the amount of the claim not used as an offset against the state premium tax liability may be carried forward as a tax credit against subsequent years' state premium tax liability for the period, not to exceed fivefifteen taxable years, provided that the insurer remains in an enterprise zone.

G.  If a person purchases an insurance business in a zone or if an insurance business in a zone changes ownership through reorganization, stock purchase or merger, the new taxpayer may claim first year credits only for one or more qualified employment positions that it created and filled with an eligible employee after the purchase or reorganization was complete.  If a person purchases a taxpayer that had qualified for first or second year credits or if an insurance business changes ownership through reorganization, stock purchase or merger, the new taxpayer may claim the second or third year credits if it meets other eligibility requirements of this section. Credits for which a taxpayer qualified before the changes described in this subsection are terminated and lost at the time the changes are implemented.

H.  An insurer that claims a tax credit against state premium tax liability is not required to pay any additional retaliatory tax imposed pursuant to section 20‑230 as a result of claiming that tax credit.

I.  A failure to timely report and certify to the department of commerce the information prescribed by section 41‑1525, subsection C, paragraphs 1, 2 and 3 and in the manner prescribed by section 41‑1525, subsection D, disqualifies the insurer from the credit under this section. The department of insurance shall require written evidence of the timely report to the department of commerce.

J.  The termination of an enterprise zone does not affect the credit under this section with respect to:

1.  Insurers that have employees in the second and third years of employment in qualified employment positions under subsection A, paragraphs 2 and 3 of this section if the business remains in the location that was in the enterprise zone.

2.  Amounts carried forward into subsequent taxable years under subsection F of this section.

K.  J.  The department may adopt rules necessary for the administration of this section.

L.  K.  For the purposes of this section, "insurer" means any entity that is subject to premium tax liability pursuant to section 20‑224, 20‑837, 20‑1010, 20‑1060 or 20‑1097.07. END_STATUTE

Sec. 2.  Section 23-769, Arizona Revised Statutes, is amended to read:

START_STATUTE23-769.  Job training employer tax

A.  Beginning on January 1, 2001, a tax equal to one‑tenth of one per cent of taxable wages as provided and defined in section 23‑622 and that are paid to an employee each year is imposed on each employer in this state except employers described in subsection B or C of this section.

B.  Subsection A of this section does not apply to employers who have:

1.  Elected to become liable for payment in lieu of contributions pursuant to section 23‑750.

2.  Fewer than fifty permanent full-time employees who are hired to work at least one thousand seven hundred fifty hours per year.

C.  Until the amount of the excise tax imposed pursuant to 26 United States Code section 3301 is reduced to six per cent or less, subsection A of this section does not apply to employers:

1.  With a positive reserve ratio of at least thirteen per cent pursuant to section 23‑730.

2.  With a positive reserve ratio of at least twelve per cent but less than thirteen per cent.

3.  That are assigned the contribution rate of two per cent pursuant to section 23‑729 or two and seven‑tenths per cent pursuant to section 23‑730.

4.  With a negative reserve ratio pursuant to section 23‑730.

D.  The department of economic security shall collect this tax on a quarterly basis and shall deposit, pursuant to sections 35‑146 and 35‑147, the monies collected pursuant to this section in the Arizona job training fund established by section 41‑1544.  Monies collected pursuant to this section shall not be commingled in any manner with monies collected pursuant to articles 4, 5 and 5.1 of this chapter.

E.  From and after December 31, 2004, the payment of contributions or job training employer taxes is not required if the quarterly amount of the contributions and taxes is less than ten dollars. END_STATUTE

Sec. 3.  Section 35-701, Arizona Revised Statutes, as amended by Laws 2010, chapter 17, section 22, is amended to read:

START_STATUTE35-701.  Definitions

In this chapter, unless the context otherwise requires:

1.  "Corporation" means any corporation organized as an authority as provided in this chapter.

2.  "Designated area" means any area of this state which is either designated pursuant to section 36‑1479 as a slum or blighted area as defined in section 36‑1471, designated by regulation as a pocket of poverty or a neighborhood strategy area by the United States department of housing and urban development pursuant to title I of the housing and community development act of 1977 (P.L. 95-128; 42 United States Code sections 5301 through 5320), as amended, and the department of housing and urban development act (P.L. 89-174; 42 United States Code section 3535(d)) or designated by the United States department of housing and urban development as an empowerment or enterprise zone pursuant to the federal omnibus budget reconciliation act of 1993 (P.L. 103-66; 26 United States Code section 1391(g)) or an area certified as an enterprise zone pursuant to section 41‑1524, subsection B.

3.  "Governing body" means:

(a)  The board or body in which the general legislative powers of the municipality or the county are vested.

(b)  The Arizona board of regents with respect to a corporation formed with the permission of the Arizona board of regents.

4.  "Income" means gross earnings from wages, salary, commissions, bonuses or tips from all jobs, net earnings from such person's or family's own nonfarm business, professional practice or partnership, and net earnings from such person's or family's own farm.  Income includes income, other than earnings, that consists of amounts received from social security or railroad retirement, interest, dividends, veterans payments, pensions and other regular payments, public assistance or welfare payments, including aid for dependent children, old age assistance and aid to the blind or totally disabled, but excluding separate payments for hospital or other medical care.

5.  "Manufactured house" means a structure that is manufactured in a factory after June 15, 1976, that is delivered to a homesite in more than one section and that is placed on a permanent foundation.  The dimensions of the completed house shall not be less than twenty feet by forty feet, the roof must be sloping, the siding and roofing must be the same as those found in site‑built houses and the house must be eligible for thirty year real estate mortgage financing.

6.  "Municipality" or "county" means the Arizona board of regents or any incorporated city or town, including charter cities, or any county in this state in which a corporation may be organized and in which it is contemplated the corporation will function.

7.  "Persons of low and moderate income" means, for the purposes of financing owner‑occupied single family dwelling units in areas which the municipality has found, pursuant to section 36‑1479, to be slum or blighted areas, as defined in section 36‑1471, persons and families whose income does not exceed two and one‑half times the median family income of this state.  In all other areas it means persons and families whose income does not exceed one and one‑half times the median family income of this state.

8.  "Project" means any land, any building or any other improvement and all real and personal properties, including machinery and equipment whether or not now in existence or under construction and whether located within or without this state or the municipality or county approving the formation of the corporation, that are suitable for any of the following:

(a)  With respect to a corporation formed with the permission of a municipality or county other than the Arizona board of regents:

(i)  Any enterprise for the manufacturing, processing or assembling of any agricultural or manufactured products.

(ii)  Any commercial enterprise for the storing, warehousing, distributing or selling of products of agriculture, mining or industry, or of processes related thereto, including research and development.

(iii)  Any office building or buildings for use as corporate or company headquarters or regional offices or the adaptive use for offices of any building within this state that is on the national register of historic places or rehabilitation of residential buildings located in registered historic neighborhoods.

(iv)  A health care institution as defined in section 36‑401.

(v)  Residential real property for dwelling units located within the municipality or county approving the formation of the corporation and, in the case of a county, whether or not also within a municipality that is within the county.

(vi)  Repairing or rehabilitating single family dwelling units or constructing or repairing residential fences and walls.

(vii)  Convention or trade show facilities.

(viii)  Airports, docks, wharves, mass commuting facilities, parking facilities or storage or training facilities directly related to any of the facilities as provided in this item.

(ix)  Sewage or solid waste disposal facilities or facilities for the furnishing of electric energy, gas or water.

(x)  Industrial park facilities.

(xi)  Air or water pollution control facilities.

(xii)  Any educational institution that is operated by a nonprofit educational organization that is exempt from taxation under section 501(c)(3) of the United States internal revenue code and that is not otherwise funded by state monies, any educational institution or organization that is established under title 15, chapter 1, article 8 and that is owned by a nonprofit organization, any private nonsectarian school or any private nonsectarian organization established for the purpose of funding a joint technical education school district.

(xiii)  Research and development facilities.

(xiv)  Commercial enterprises, including facilities for office, recreational, hotel, motel and service uses if the facilities authorized by this item are to be located in a designated area.

(xv)  A child welfare agency, as defined in section 8‑501, owned and operated by a nonprofit organization.

(xvi)  A transportation facility constructed or operated pursuant to title 28, chapter 22.

(xvii)  A museum operated by a nonprofit organization.

(xviii)  Facilities owned or operated by a nonprofit organization described in section 501(c) of the United States internal revenue code of 1986.

(xix)  New or existing correctional facilities within this state.

(b)  With respect to a corporation formed with the permission of the Arizona board of regents, any facility consisting of classrooms, lecture halls or conference centers or any facility for research and development or for manufacturing, processing, assembling, marketing, storing and transferring items developed through or connected with research and development or in which the results of such research and development are utilized, but only if the facility is located in an area designated as a research park by the Arizona board of regents.

9.  "Property" means any land, improvements thereon, buildings and any improvements thereto, machinery and equipment of any and all kinds necessary to a project and any other personal properties deemed necessary in connection with a project.

10.  "Research park" means an area of land that has been designated by the Arizona board of regents as a research park for a university and that, at the date of designation, is owned by this state or by the Arizona board of regents.

11.  "Single family dwelling unit" includes any new, used or manufactured house that meets the insuring requirements of the federal housing administration, the veterans administration or any other insuring entity of the United States government or any private mortgage insurance or surety company that is approved by the federal home loan mortgage corporation or the federal national mortgage association. END_STATUTE

Sec. 4.  Heading change

The article heading of title 41, chapter 10, article 2, Arizona Revised Statutes, is changed from "ENTERPRISE ZONES" to "ARIZONA ENTERPRISE DEVELOPMENT PROGRAM".

Sec. 5.  Repeal

Sections 41-1521, 41-1522, 41-1523 and 41-1524, Arizona Revised Statutes, are repealed.

Sec. 6.  Section 41-1525, Arizona Revised Statutes, is amended to read:

START_STATUTE41-1525.  Tax incentives; definitions

A.  The owner of a business or an insurer located in an enterprise zone before July 1, 2011 An Arizona basic enterprise that qualifies under this section is eligible for an income tax credit under section 43‑1074 or 43‑1161 or a premium tax credit under section 20‑224.03 for net increases in qualified employment positions, except employment positions at a zone location where more than ten per cent of the business conducted at the location consists of retail sales of tangible personal property, measured either by the number of employees assigned to retail sales or the square footage of the facility used for retail sales activities at the location in the zone.  Retail sales and retail sales activities do not include:

1.  Food and beverage for consumption on the premises solely by employees and occasional guests of employees at the location.

2.  Promotional products not available for sale and displaying the company logo or trademark.

3.  Products sold to company employees.

B.  To qualify under this section A business or insurer must:

1.  Meet the requirements as an Arizona basic enterprise.

2.  Relocate its operation from outside this state to a location in this state or expand its in-state operation.

3.  Create at least twenty-five new full-time employment positions in a city or town with a population of fifty thousand persons or more or at least fifteen new full-time employment positions in any other location.

4.  Compensate full-time employees at the location at least equal to the median wage by county as computed annually by the department of commerce.

5.  Provide health insurance coverage for full-time employees for which the employer pays at least sixty‑five per cent of the premium or membership cost or, if the taxpayer is self‑insured, the employer pays at least sixty‑five per cent of a predetermined fixed cost per employee for an insurance program that is payable whether or not the employee has filed claims.

B.  C.  To qualify forclaim a tax credit, the owner must:

1.  Certify to the department of revenue or the department of insurance, as applicable, on or before the due date of the tax return, including any extensions for the year for which the credit is claimed, in a form prescribed by the department of revenue including electronic media, information that the department of revenue may require, including the ownership interests of co‑owners of the business if the business is a partnership, limited liability company or an S corporation, and the following information for each employee in the zone location:

(a)  The date of initial employment.

(b)  The number of hours worked during the year.

(c)  Whether the position was full‑time.

(d)  The residence of the employee.

(e)  Whether the residence was in or outside the zone.

(f)  If the residence was in the zone, where in the zone it is located.

(g)  (d)  The employee's annual compensation.

(h)  (e)  The total cost of health insurance for the employee and the cost paid by the employer.

(i)  (f)  If the employee had been previously employed, the last date of previous employment.

2.  Report and certify to the department of commerce the following information, and provide supporting documentation, on a form and in a manner approved by the department of commerce and, as specified in subsection D of this section, for each year in which the taxpayer earned and claimed or used credits or is carrying forward amounts from previously earned and claimed credits:

(a)  The business name and mailing address and any other contact information requested by the department of commerce.

(b)  The business location and the name of the zone in which the business is located.

(c)  The average hourly wage and the total amount of compensation paid to employees qualified for the credit and for all employees at the zone location.

(d)  The total number of qualified employment positions and the amount of income tax or premium tax credits qualified for in the tax year.

(e)  The estimated amount of tax credits to be used in the tax year to offset tax liability.

(f)  The estimated amount of tax credits to be available for carryforward in the tax year and the tax year in which the credits expire.

(g)  The number of jobs and the amount of credits earned and claimed on the prior year's income tax or insurance premium tax returns.

(h)  The amount of credits used to offset tax liabilities on the prior year's income tax or insurance premium tax return.

(i)  The amount of credits available for carryforward as reported on the prior year's tax return and the tax year the credits expire.

(j)  Capital investment made in the zone at the location during the tax year and the preceding tax year.

(k)  That each qualified employment position meets all of the following requirements:

(i)  The position is at least one thousand seven hundred fifty hours per year of full‑time permanent employment.

(ii)  All credits that are being claimed are for wages for job duties performed primarily at the zone designated locations of the business.

(iii)  The employment includes health insurance coverage for the employee for which the employer pays at least fifty sixty‑five per cent of the premium or membership cost. If the taxpayer is self‑insured, the employer pays at least fifty sixty‑five per cent of a predetermined fixed cost per employee for an insurance program that is payable whether or not the employee has filed claims.

(iv)  The employer pays compensation at least equal to the median wage offer by county as computed annually by the department of economic security research administration division commerce.

(l)  That the only retail sales activities engaged in at the zone location were as specified in subsection A of this section.

(m)  Other information necessary for the management and reporting of the incentives under this section.

3.  For any year in which the taxpayer is claiming first year credits, report and certify the following additional information and provide supporting documentation to the department of commerce on a form and in a manner approved by the department, and as specified in subsection D of this section:

(a)  That thirty‑five per cent of the employees with respect to whom a credit is claimed for the first year of employment resided on the date of employment in an enterprise zone that is located in the same county in which the business is located.

(b)  (a)  That the increase in the number of qualified employment positions for which credit is sought is the least of:

(i)  The total number of filled qualified employment positions created at the zone location during the tax year.

(ii)  The difference between the average number of full‑time employees at a zone location in the current tax year and the average number of full‑time employees during the immediately preceding tax year.

(iii)  Two hundred qualified employment positions per taxpayer each year.

(c)  (b)  That all employees filling a qualified employment position were employed for at least ninety days during the first taxable year.

(d)  (c)  That none of the employees filling qualified employment positions were employed by the taxpayer during the twelve months before the current date of hire.

(e)  (d)  That all employees for whom second and third year credits are claimed are in qualified employment positions for which first year credits were allowed and claimed by the taxpayer on the original first and second year tax returns.  For the purposes of this subsection, the requirement to claim the credit on the original tax return does not apply to qualified employment positions created before January 1, 2002 and certified to the department of commerce.

(f)  (e)  That all employees for whom credits are taken performed their job duties primarily at the zone designated locations of the business.

C.  D.  To qualify for first year credits, the report and certification prescribed by subsection C, paragraphs 2 and 3 of this section must be filed with the department of commerce by the earlier of six months after the end of the tax year in which the qualified employment positions were created or by the date the tax return is filed for the tax year in which the qualified employment positions were created.  To qualify for second year credits, the report and certification prescribed by subsection C, paragraph 2 of this section must be filed with the department of commerce by the earlier of six months after the end of the taxable year or the date the tax return is filed for the tax year in which the second year credits are allowable. To qualify for third year credits, the report and certification prescribed by subsection C, paragraph 2 of this section must be filed with the department of commerce by the earlier of six months after the end of the tax year or the date the tax return is filed for the tax year in which the third year credits are allowable.

D.  E.  Any information submitted to the department of commerce under subsection C, paragraph 2, subdivisions (e) through (i) of this section is exempt from the provisions of title 39, chapter 1, article 2 and considered to be confidential and is not subject to disclosure except:

1.  To the extent that the person or organization that provided the information consents to the disclosure.

2.  To the department of revenue for use in tax administration.

E.  Real and personal property within an enterprise zone which is owned or used by a small manufacturing business that is certified by the department pursuant to section 41‑1525.01 before July 1, 2011 shall be assessed as class six property as provided by section 42‑12006.

F.  The following property that is owned or used by a qualifying business that is certified by the department pursuant to section 41-1525.01 shall be assessed as class six property as provided by section 42-12006 or as class nine property as provided by section 42-12009:

1.  Personal property and improvements that are constructed or undergo a major renovation from and after June 30, 2010 through June 30, 2016.

2.  Real property that is owned by the qualifying business on which the personal property and improvements described in paragraph 1 of this subsection are located.

F.  G.  Documents filed with the department of commerce, the department of insurance and the department of revenue under subsection C of this section shall contain either a sworn statement or certification, signed by an officer of the company under penalty of perjury, that the information contained is true and correct according to the best belief and knowledge of the person submitting the information after a reasonable investigation of the facts.  If the document contains information that is materially false, the taxpayer is ineligible for the tax incentives under subsection A of this section and is subject to recovery of the amount of tax incentives allowed in preceding taxable years based on the false information, plus penalties and interest.

G.  H.  The department of commerce may make site visits to a taxpayer's facilities if it is necessary to further document or clarify reported information.  The taxpayer must freely provide the access.

H.  I.  The department by rule may prescribe additional reporting requirements for taxpayers who claim tax benefits pursuant to this section.

I.  J.  For the purposes of this section:

1.  "Arizona basic enterprise" means any enterprise that is located or principally based in this state and that can provide demonstrable evidence that it meets one or more of the following:

(a)  It is primarily engaged in one or more of the Arizona basic industries.

(b)  It is the national or regional corporate headquarters of an Arizona basic industry or the corporate or regional headquarters of a multistate enterprise that is primarily engaged in out-of-state industrial activities.

(c)  It is primarily engaged in developing or producing goods or providing services for out-of state sale.

2.  "Arizona basic industry" means:

(a)  Manufacturing industries identified by North American industry classification system code sectors 31, 32 and 33.

(b)  Producing goods or services that derive at least sixty-five per cent of revenue from out-of-state sales.

(c)  Research and development of new products, processes or technologies.

(d)  National or regional headquarters or back‑office operations supporting a national or regional company.

(e)  Warehouse distribution operations identified by North American industry classification system code sectors 42, 44 and 45 if forty per cent of inventory is shipped out of state.

(f)  Other industries designated by the director after consultation with the president of the senate and the speaker of the house of representatives.