07 LC
14 9599ER
House
Bill 437
By:
Representatives Martin of the
47th,
Fludd of the
66th,
and Royal of the
171st
A
BILL TO BE ENTITLED
AN ACT
AN ACT
To
amend Article 2 of Chapter 7 of Title 48 of the Official Code of Georgia
Annotated, relating to imposition and computation of income taxes, so as to
provide for state income and financial institutions tax credits with respect to
certain qualified low-income community investments and long-term debt
securities; to define terms; to provide for allocation of credits by the
Department of Economic Development; to provide for recapture; to provide for
rules and regulations; to provide for related matters; to provide for an
effective date and applicability; to repeal conflicting laws; and for other
purposes.
BE
IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
SECTION
1.
Article
2 of Chapter 7 of Title 48 of the Official Code of Georgia Annotated, relating
to imposition and computation of income taxes, is amended by adding a new Code
section to read as follows:
"48-7-29.13.
(a)
As used in this Code section, the term:
(1)
'Adjusted purchase price' means the product of:
(A)
The amount paid to the issuer of a qualified equity investment for such
qualified equity investment; and
(B)
The following fraction:
(i)
The numerator shall be the dollar amount of qualified low-income community
investments held by the issuer in this state as of the credit allowance date
during applicable tax year; and
(ii)
The denominator shall be the total dollar amount of qualified low-income
community investments held by the issuer as of the credit allowance date during
the applicable tax year.
For
purposes of calculating the amount of qualified low-income community investments
held by an issuer, an investment shall be considered held by an issuer even if
the investment has been sold or repaid, provided that the issuer reinvests an
amount equal to the capital returned to or recovered by the issuer from the
original investment, exclusive of any profits realized, in another qualified
low-income community investment within 12 months of the receipt of such capital.
An issuer will not be required to reinvest capital returned from qualified
low-income community investments after the sixth anniversary of the issuance of
the qualified equity investment, the proceeds of which were used to make the
qualified low-income community investment, and the qualified low-income
community investment shall be considered held by the issuer through the seventh
anniversary of the qualified equity investment´s issuance.
(2)
'Applicable percentage' means 7 percent for each of the credit allowance
dates.
(3)
'Credit allowance date,' with respect to any qualified equity investment,
means:
(A)
The date on which such investment is initially made; and
(B)
Each of the six anniversary dates of such date thereafter.
(4)
'Long-term debt security' means any debt instrument issued by a qualified
community development entity, at par value or a premium, with an original
maturity date of at least seven years from the date of its issuance, with no
acceleration of repayment, amortization, or prepayment features prior to its
original maturity date, and with no distribution, payment, or interest features
related to the profitability of the qualified community development entity or
the performance of the qualified community development entity´s investment
portfolio. The foregoing shall in no way limit the holder´s ability to
accelerate payments on the debt instrument in situations where the issuer has
defaulted on covenants designed to ensure compliance with this Code section or
Section 45D of the Internal Revenue Code of 1986, as amended.
(5)
'Qualified active low-income community business' has the meaning given such term
in Section 45D of the Internal Revenue Code of 1986, as amended, provided that
any business that derives or projects to derive 15 percent of more of its annual
revenue from the rental or sale of real estate shall not be considered to be a
qualified active low-income community business.
(6)
'Qualified community development entity' has the meaning given such term in
Section 45D of the Internal Revenue Code of 1986, as amended, provided that such
entity has entered into an allocation agreement with the Community Development
Financial Institutions Fund of the United States Treasury Department with
respect to credits authorized by Section 45D of the Internal Revenue Code of
1986, as amended.
(7)
'Qualified equity investment' means any equity investment in, or long-term debt
security issued by, a qualified community development entity that:
(A)
Is acquired after January 1, 2008, at its original issuance solely in exchange
for cash;
(B)
Has at least 85 percent of its cash purchase price used by the issuer to make
qualified low-income community investments; and
(C)
Is designated by the issuer as a qualified equity investment pursuant to the
provisions of this Code section, regardless of whether it also has been
designated as a qualified equity investment under Section 45D of the Internal
Revenue Code of 1986, as amended.
This
term shall include any qualified equity investment that does not meet the
provisions of subparagraph (A) of this paragraph if such investment was a
qualified equity investment in the hands of a prior holder.
(8)
'Qualified low-income community investment' means any capital or equity
investment in, or loan to, any qualified active low-income community business.
With respect to any one qualified active low-income community business, on a
collective basis with all of its affiliates, the maximum amount of investment
that any qualified community development entity, on an aggregate basis with all
of its affiliates, may use for the calculation of any numerator described in
division (a)(1)(B)(i) of this Code section shall be $10 million.
(9)
'Tax credit' means a credit against the tax otherwise due under this chapter,
excluding withholding tax or the tax imposed in Article 4 of Chapter 6 of this
title.
(10)
'Taxpayer' means any individual or entity subject to the tax imposed in this
chapter, excluding withholding tax or the tax imposed in Article 4 of Chapter 6
of this title.
(b)
A taxpayer that holds a qualified equity investment on a credit allowance date
of such qualified equity investment shall be entitled to a tax credit during the
taxable year including such credit allowance date. The tax credit amount shall
be equal to the applicable percentage of the adjusted purchase price paid to the
issuer of such qualified equity investment. The amount of the tax credit that
may be redeemed in any tax year shall not exceed the amount of the
taxpayer´s state tax liability for such tax year. No tax credit authorized
under this Code section shall be refundable or transferable. Tax credits earned
by a partnership, limited liability company, Subchapter 'S' corporation, or
other 'pass-through' entity may be allocated to the partners, members, or
shareholders of such entity for their direct redemption in accordance with the
provisions of any agreement among such partners, members, or shareholders. Any
amount of tax credit that the taxpayer is prohibited by this Code section from
redeeming in a taxable year may be carried forward to any of the taxpayer´s
subsequent taxable years. The amount of tax credits that may be allocated by
the Department of Economic Development under this Code section in each fiscal
year shall not exceed $20 million.
(c)
The issuer of the qualified equity investment shall certify to the Department of
Economic Development the anticipated dollar amount of such investments to be
made in this state during the first 12 month period following the initial credit
allowance date. If on the second credit allowance date, the actual dollar
amount of such investments is different from the amount estimated, the
Department of Economic Development shall adjust the credits arising on the
second allowance date to account for such difference.
(d)
The Department of Economic Development shall recapture the tax credit allowed
under this Code section with respect to such qualified equity investment under
this Code section if:
(1)
Any amount of the federal tax credit available with respect to a qualified
equity investment that is eligible for a tax credit under this Code section is
recaptured under Section 45D of the Internal Revenue Code of 1986, as amended;
or
(2)
The issuer redeems or makes any principal repayment with respect to a qualified
equity investment prior to the seventh anniversary of the issuance of such
qualified equity investment.
Any
tax credit that is subject to recapture shall be recaptured from the taxpayer
that claimed the tax credit on a return.
(e)
The Department of Economic Development shall promulgate rules to implement the
provisions of this Code section, including recapture provisions on a scaled
proportional basis and to administer the allocation of tax credits issued for
qualified equity investments which shall be conducted on a first-come,
first-serve basis."
SECTION
2.
This
Act shall become effective January 1, 2008, and shall apply with respect to
taxable years beginning on or after that date.
SECTION
3.
All
laws and parts of laws in conflict with this Act are repealed.