HOUSE BILL NO. 2295 103RD GENERAL ASSEMBLY
INTRODUCED BY REPRESENTATIVE CASTEEL.
5456H.01I JOSEPH ENGLER, Chief Clerk
AN ACT To repeal section 32.115, RSMo, and to enact in lieu thereof three new sections relating to tax credits.
Be it enacted by the General Assembly of the state of Missouri, as follows:
Section A. Section 32.115, RSMo, is repealed and three new sections enacted in lieu 2 thereof, to be known as sections 32.115, 348.273, and 348.274, to read as follows: 32.115. 1. The department of revenue shall grant a tax credit, to be applied in the 2 following order until used, against: 3 (1) The annual tax on gross premium receipts of insurance companies in chapter 148; 4 (2) The tax on banks determined pursuant to subdivision (2) of subsection 2 of section 5 148.030; 6 (3) The tax on banks determined in subdivision (1) of subsection 2 of section 7 148.030; 8 (4) The tax on other financial institutions in chapter 148; 9 (5) The corporation franchise tax in chapter 147; 10 (6) The state income tax in chapter 143; and 11 (7) The annual tax on gross receipts of express companies in chapter 153. 12 2. For proposals approved pursuant to section 32.110: 13 (1) The amount of the tax credit shall not exceed [fifty] seventy percent of the total 14 amount contributed during the taxable year by the business firm or, in the case of a financial 15 institution, where applicable, during the relevant income period in programs approved 16 pursuant to section 32.110;
EXPLANATION — Matter enclosed in bold-faced brackets [thus] in the above bill is not enacted and is intended to be omitted from the law. Matter in bold-face type in the above bill is proposed language. HB 2295 2
17 (2) Except as provided in subsection 2 or 5 of this section, a tax credit of up to 18 seventy percent may be allowed for contributions to programs where activities fall within the 19 scope of special program priorities as defined with the approval of the governor in regulations 20 promulgated by the director of the department of economic development; 21 (3) Except as provided in subsection 2 or 5 of this section, the tax credit allowed for 22 contributions to programs located in any community shall be equal to seventy percent of the 23 total amount contributed where such community is a city, town or village which has fifteen 24 thousand or less inhabitants as of the last decennial census and is located in a county which is 25 either located in: 26 (a) An area that is not part of a standard metropolitan statistical area; 27 (b) A standard metropolitan statistical area but such county has only one city, town or 28 village which has more than fifteen thousand inhabitants; or 29 (c) A standard metropolitan statistical area and a substantial number of persons in 30 such county derive their income from agriculture. 31 32 Such community may also be in an unincorporated area in such county as provided in 33 subdivision (1), (2) or (3) of this subsection. Except in no case shall the total economic 34 benefit of the combined federal and state tax savings to the taxpayer exceed the amount 35 contributed by the taxpayer during the tax year; 36 (4) Such tax credit allocation, equal to seventy percent of the total amount 37 contributed, shall not exceed four million dollars in fiscal year 1999 and six million dollars in 38 fiscal year 2000 and any subsequent fiscal year. When the maximum dollar limit on the 39 seventy percent tax credit allocation is committed, the tax credit allocation for such programs 40 shall then be equal to fifty percent credit of the total amount contributed. Regulations 41 establishing special program priorities are to be promulgated during the first month of each 42 fiscal year and at such times during the year as the public interest dictates. Such credit shall 43 not exceed two hundred and fifty thousand dollars annually except as provided in subdivision 44 (5) of this subsection. No tax credit shall be approved for any bank, bank and trust company, 45 insurance company, trust company, national bank, savings association, or building and loan 46 association for activities that are a part of its normal course of business. Any tax credit not 47 used in the period the contribution was made may be carried over the next five succeeding 48 calendar or fiscal years until the full credit has been claimed. Except as otherwise provided 49 for proposals approved pursuant to section 32.111, 32.112 or 32.117, in no event shall the 50 total amount of all other tax credits allowed pursuant to sections 32.100 to 32.125 exceed 51 thirty-two million dollars in any one fiscal year, of which six million shall be credits allowed 52 pursuant to section 135.460. If six million dollars in credits are not approved, then the 53 remaining credits may be used for programs approved pursuant to sections 32.100 to 32.125; HB 2295 3
54 (5) The credit may exceed two hundred fifty thousand dollars annually and shall not 55 be limited if community services, crime prevention, education, job training, physical 56 revitalization or economic development, as defined by section 32.105, is rendered in an area 57 defined by federal or state law as an impoverished, economically distressed, or blighted area 58 or as a neighborhood experiencing problems endangering its existence as a viable and stable 59 neighborhood, or if the community services, crime prevention, education, job training, 60 physical revitalization or economic development is limited to impoverished persons. 61 3. For proposals approved pursuant to section 32.111: 62 (1) The amount of the tax credit shall not exceed fifty-five percent of the total amount 63 invested in affordable housing assistance activities or market rate housing in distressed 64 communities as defined in section 135.530 by a business firm. Whenever such investment is 65 made in the form of an equity investment or a loan, as opposed to a donation alone, tax credits 66 may be claimed only where the loan or equity investment is accompanied by a donation 67 which is eligible for federal income tax charitable deduction, and where the total value of the 68 tax credits herein plus the value of the federal income tax charitable deduction is less than or 69 equal to the value of the donation. Any tax credit not used in the period for which the credit 70 was approved may be carried over the next ten succeeding calendar or fiscal years until the 71 full credit has been allowed. If the affordable housing units or market rate housing units in 72 distressed communities for which a tax is claimed are within a larger structure, parts of which 73 are not the subject of a tax credit claim, then expenditures applicable to the entire structure 74 shall be reduced on a prorated basis in proportion to the ratio of the number of square feet 75 devoted to the affordable housing units or market rate housing units in distressed 76 communities, for purposes of determining the amount of the tax credit. The total amount 77 of tax credit granted for programs approved pursuant to section 32.111 for the fiscal year 78 beginning July 1, 1991, shall not exceed two million dollars, to be increased by no more than 79 two million dollars each succeeding fiscal year, until the total tax credits that may be 80 approved reaches ten million dollars in any fiscal year; 81 (2) For any year during the compliance period indicated in the land use restriction 82 agreement, the owner of the affordable housing rental units for which a credit is being 83 claimed shall certify to the commission that all tenants renting claimed units are income 84 eligible for affordable housing units and that the rentals for each claimed unit are in 85 compliance with the provisions of sections 32.100 to 32.125. The commission is authorized, 86 in its discretion, to audit the records and accounts of the owner to verify such certification; 87 (3) In the case of owner-occupied affordable housing units, the qualifying owner 88 occupant shall, before the end of the first year in which credits are claimed, certify to the 89 commission that the occupant is income eligible during the preceding two years, and at the 90 time of the initial purchase contract, but not thereafter. The qualifying owner occupant shall HB 2295 4
91 further certify to the commission, before the end of the first year in which credits are claimed, 92 that during the compliance period indicated in the land use restriction agreement, the cost of 93 the affordable housing unit to the occupant for the claimed unit can reasonably be projected to 94 be in compliance with the provisions of sections 32.100 to 32.125. Any succeeding owner 95 occupant acquiring the affordable housing unit during the compliance period indicated in the 96 land use restriction agreement shall make the same certification; 97 (4) If at any time during the compliance period the commission determines a project 98 for which a proposal has been approved is not in compliance with the applicable provisions of 99 sections 32.100 to 32.125 or rules promulgated therefor, the commission may within one 100 hundred fifty days of notice to the owner either seek injunctive enforcement action against the 101 owner, or seek legal damages against the owner representing the value of the tax credits, or 102 foreclose on the lien in the land use restriction agreement, selling the project at a public sale, 103 and paying to the owner the proceeds of the sale, less the costs of the sale and less the value of 104 all tax credits allowed herein. The commission shall remit to the director of revenue the 105 portion of the legal damages collected or the sale proceeds representing the value of the tax 106 credits. However, except in the event of intentional fraud by the taxpayer, the proposal's 107 certificate of eligibility for tax credits shall not be revoked. 108 4. For proposals approved pursuant to section 32.112, the amount of the tax credit 109 shall not exceed fifty-five percent of the total amount contributed to a neighborhood 110 organization by business firms. Any tax credit not used in the period for which the credit was 111 approved may be carried over the next ten succeeding calendar or fiscal years until the full 112 credit has been allowed. The total amount of tax credit granted for programs approved 113 pursuant to section 32.112 shall not exceed one million dollars for each fiscal year. For any 114 fiscal year in which the total amount of tax credits authorized for programs approved pursuant 115 to section 32.111 is less than ten million dollars, such amount not authorized may be 116 authorized for programs approved pursuant to section 32.112 during the same fiscal year, 117 provided that the total combined amount of tax credits for programs approved pursuant to 118 sections 32.111 and 32.112 during the fiscal year does not exceed eleven million dollars. 119 5. The total amount of tax credits used for market rate housing in distressed 120 communities pursuant to sections 32.100 to 32.125 shall not exceed thirty percent of the total 121 amount of all tax credits authorized pursuant to sections 32.111 and 32.112. 348.273. 1. This section and section 348.274 shall be known and may be cited as 2 the "Missouri Angel Investment Incentive Act". 3 2. As used in this section and section 348.274, the following terms mean: 4 (1) "Cash investment", any moneys or money-equivalent contribution in 5 consideration of qualified securities; 6 (2) "Department", the department of economic development; HB 2295 5
7 (3) "Designated geographic regions", the following four regions: 8 (a) Region 1: Counties of Bates, Cass, Clay, Jackson, and Platte; 9 (b) Region 2: Counties of Franklin, Jefferson, Lincoln, St. Charles, Warren, and 10 St. Louis, and the City of St. Louis; 11 (c) Region 3: Counties geographically north of the Missouri River, excluding any 12 counties in region 1 or region 2; and 13 (d) Region 4: Counties geographically south of the Missouri River, excluding any 14 counties in region 1 or region 2; 15 (4) "Investor", one of the following persons or entities: 16 (a) A natural person who is an accredited investor as defined under 17 CFR 17 230.501(a)(5) or 230.501(a)(6), as in effect on July 24, 2013; 18 (b) A permitted entity investor who is an accredited investor as defined under 17 19 CFR 230.501(a)(8), as in effect on July 24, 2013; or 20 (c) A natural person or permitted entity investor making an investment who 21 qualifies under the federal Jumpstart Our Business Startups (JOBS) Act, Pub. L. 112- 22 106, as in effect on April 5, 2012. 23 24 The term "investor" shall not include any person who serves as an executive, officer, or 25 employee of the business in which an otherwise qualified cash investment is made, and 26 such person shall not qualify for the issuance of tax credits for such investment. 27 However, an investor who serves solely as a director may qualify for the issuance of tax 28 credits; 29 (5) "MTC", the Missouri technology corporation established under section 30 348.251; 31 (6) "Owner", any natural person who is, directly or indirectly, a partner, 32 stockholder, or member in a permitted entity investor; 33 (7) "Permitted entity investor", any general partnership; limited partnership; 34 corporation that has in effect a valid election to be taxed as an S corporation under the 35 Internal Revenue Code of 1986, as amended; revocable living trust; nonprofit 36 corporation; or limited liability company that has elected to be taxed as a 37 partnership under the Internal Revenue Code of 1986, as amended, and that was 38 established and is operated for the purpose of making investments in other entities; 39 (8) "Qualified knowledge-based company", a company engaged in the research, 40 development, implementation, and commercialization of innovative technologies, 41 products, and services for use in the commercial marketplace; HB 2295 6
42 (9) "Qualified Missouri business", a Missouri business that is approved as a 43 qualified knowledge-based company by the MTC and meets at least one of the following 44 criteria: 45 (a) Any partnership, association, limited liability company, or corporation 46 domiciled in Missouri; or 47 (b) Any limited liability company or corporation that is domiciled outside the 48 state of Missouri but has its business operations located primarily in Missouri or does 49 substantially all of such business’s production in Missouri; 50 (10) "Qualified securities", a cash investment through any form or combination 51 of forms of financial assistance as provided under this subdivision. Such forms of 52 financial assistance include, but are not limited to: 53 (a) Any form of equity, such as: 54 a. A general or limited partnership interest; 55 b. Common stock; 56 c. Simple agreement for future equity (SAFE); or 57 d. Preferred stock, without regard to voting rights or seniority position and 58 regardless of whether convertible into common stock; and 59 (b) Any debt instrument subordinate to the general creditors of the qualified 60 Missouri business debtor that requires no payment from the qualified Missouri business 61 debtor and that shall convert to some form of equity prior to, or in conjunction with, the 62 qualified Missouri business raising any additional funds; 63 (11) "Rural county", any county in the state of Missouri with fewer than twenty- 64 five thousand inhabitants, and such term shall be deemed to include both the farm and 65 nonfarm population thereof. The number of inhabitants specified in this subdivision 66 shall be increased by six percent every ten years after each decennial census beginning 67 in 2030; 68 (12) "Tax credit", a credit against the tax otherwise due under chapter 143, 69 excluding withholding tax imposed by sections 143.191 to 143.265, or chapter 148. 70 3. (1) For all tax years beginning on or after January 1, 2027, a tax credit shall 71 be allowed for an investor's cash investment in the qualified securities of a qualified 72 Missouri business. The credit shall be in a total amount equal to forty percent of such 73 investor's cash investment in any qualified Missouri business, subject to the limitations 74 set forth in this subsection. The credit shall be in a total amount equal to fifty percent 75 where the investor's cash investment in the qualified securities of a qualified Missouri 76 business are in a rural county. If the amount by which that portion of the credit allowed 77 by this section exceeds the investor's tax liability in any one tax year, the remaining 78 portion of the credit may be carried forward five years or until the total amount of the HB 2295 7
79 credit is used, whichever occurs first. If the investor is a permitted entity investor, the 80 credit provided by this section shall be claimed by the permitted entity investor in 81 proportion to such owner's equity investment in the permitted entity investor. 82 (2) A cash investment in a qualified security shall be deemed to have been made 83 on the date of acquisition of the qualified security, as such date is determined in 84 accordance with the provisions of the Internal Revenue Code of 1986, as amended. 85 (3) The department and the MTC shall not allow tax credits of more than 86 seventy-five thousand dollars for a single qualified Missouri business per investor who is 87 a natural person or a permitted entity investor and shall not allow a total of three 88 hundred thousand dollars in tax credits for a single tax year per investor who is a 89 natural person or a permitted entity investor. No tax credit authorized by this section or 90 section 348.274 shall be allowed for any cash investments in qualified securities made in 91 any year after December 31, 2033. The total amount of tax credits that may be allowed 92 under this section shall not exceed six million dollars during either calendar year 2027 93 or 2028. Beginning in calendar year 2029, the total amount of tax credits allowed under 94 this section shall be annually increased by twenty percent of the total amount of tax 95 credits allowed in the immediately preceding calendar year, so long as the total amount 96 of tax credits allowed in the immediately preceding calendar year were issued during 97 such calendar year. For each successive year thereafter, if the total amount of tax 98 credits allowed in the immediately preceding calendar year under this section are 99 iss