1 STATE OF OKLAHOMA
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2 1st Session of the 59th Legislature (2023)
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3 SENATE BILL 315 By: Rader
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6 AS INTRODUCED
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7 An Act relating to income tax credit; amending 68
7 O.S. 2021, Section 2357.4, which relates to tax
8 credit for investments in qualified depreciable
8 property and a net increase in full-time-equivalent
9 employees; limiting certain credit to certain tax
9 years; limiting certain tax credit to property placed
10 in service before certain date; limiting requirement
10 to provide satisfactory proof to certain years;
11 limiting carry forward of certain credits to certain
11 years; providing for carry forward of certain
12 credits; requiring submission of claim to carry
12 forward credit; requiring submission and approval of
13 application to claim certain credit; requiring the
13 Oklahoma Department of Commerce to prescribe certain
14 form; requiring the Department to notify Oklahoma Tax
14 Commission of application approval; and providing an
15 effective date.
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18 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
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19 SECTION 1. AMENDATORY 68 O.S. 2021, Section 2357.4, is
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20 amended to read as follows:
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21 Section 2357.4. A. Except as otherwise provided in subsection
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22 F of Section 3658 of this title and in subsections J and K of this
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23 section, for taxable years beginning after December 31, 1987, there
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 1 shall be allowed a credit against the tax imposed by Section 2355 of
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2 this title for:
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3 1. Investment in qualified depreciable property placed in
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4 service during those years for use in a manufacturing operation, as
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5 defined in Section 1352 of this title, which has received a
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6 manufacturer exemption permit pursuant to the provisions of Section
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7 1359.2 of this title or a qualified aircraft maintenance or
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8 manufacturing facility as defined in Section 1357 of this title in
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9 this state or a qualified web search portal as defined in Section
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10 1357 of this title; or
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11 2. A For tax years 1988 through 2023, a net increase in the
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12 number of full-time-equivalent employees in a manufacturing
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13 operation, as defined in Section 1352 of this title, which has
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14 received a manufacturer exemption permit pursuant to the provisions
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15 of Section 1359.2 of this title or a qualified aircraft maintenance
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16 or manufacturing facility defined in Section 1357 of this title in
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17 this state or in a qualified web search portal as defined in Section
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18 1357 of this title including employees engaged in support services.
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19 B. Except as otherwise provided in subsection F of Section 3658
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20 of this title and in subsections J and K of this section, for
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21 taxable years beginning after December 31, 1998, there shall be
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22 allowed a credit against the tax imposed by Section 2355 of this
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23 title for:
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 1 1. Investment in qualified depreciable property with a total
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2 cost equal to or greater than Forty Million Dollars ($40,000,000.00)
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3 within three (3) years from the date of initial qualifying
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4 expenditure and placed in service in this state during those years
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5 for use in the manufacture of products described by any Industry
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6 Number contained in Division D of Part I of the Standard Industrial
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7 Classification (SIC) Manual, latest revision; or
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8 2. A For property placed in service before January 1, 2024, a
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9 net increase in the number of full-time-equivalent employees in this
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10 state engaged in the manufacture of any goods identified by any
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11 Industry Number contained in Division D of Part I of the Standard
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12 Industrial Classification (SIC) Manual, latest revision, if the
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13 total cost of qualified depreciable property placed in service by
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14 the business entity within the state equals or exceeds Forty Million
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15 Dollars ($40,000,000.00) within three (3) years from the date of
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16 initial qualifying expenditure.
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17 C. The For property placed in service before January 1, 2024,
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18 the business entity may claim the credit authorized by subsection B
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19 of this section for expenditures incurred or for a net increase in
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20 the number of full-time-equivalent employees after the business
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21 entity provides proof satisfactory to the Oklahoma Tax Commission
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22 that the conditions imposed pursuant to paragraph 1 or paragraph 2
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23 of subsection B of this section have been satisfied.
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 1 D. If a business entity fails to expend the amount required by
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2 paragraph 1 or paragraph 2 of subsection B of this section within
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3 the time required, the business entity may not claim the credit
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4 authorized by subsection B of this section but shall be allowed to
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5 claim a credit pursuant to subsection A of this section if the
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6 requirements of subsection A of this section are met with respect to
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7 the investment in qualified depreciable property or net increase in
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8 the number of full-time-equivalent employees.
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9 E. The credit provided for in subsection A of this section, if
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10 based upon investment in qualified depreciable property, shall not
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11 be allowed unless the investment in qualified depreciable property
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12 is at least Fifty Thousand Dollars ($50,000.00). The credit
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13 provided for in subsection A or B of this section shall not be
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14 allowed if the applicable investment is the direct cause of a
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15 decrease in the number of full-time-equivalent employees. Qualified
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16 property shall be limited to machinery, fixtures, equipment,
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17 buildings, or substantial improvements thereto, placed in service in
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18 this state during the taxable year. The taxable years for which the
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19 credit may be allowed if based upon investment in qualified
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20 depreciable property shall be measured from the year in which the
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21 qualified property is placed in service. If the credit provided for
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22 in subsection A or B of this section is calculated on the basis of
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23 the cost of the qualified property, the credit shall be allowed in
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24 each of the four (4) subsequent years. If the qualified property on
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 1 which a credit has previously been allowed is acquired from a
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2 related party, the date such property is placed in service by the
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3 transferor shall be considered to be the date such property is
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4 placed in service by the transferee, for purposes of determining the
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5 aggregate number of years for which credit may be allowed.
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6 F. The credit provided for in subsection A or B of this
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7 section, if based upon an increase in the number of full-time-
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8 equivalent employees, shall be allowed in each of the four (4)
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9 subsequent years only if the level of new employees is maintained in
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10 the subsequent year. In calculating the credit by the number of new
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11 employees, only those employees whose paid wages or salary were at
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12 least Seven Thousand Dollars ($7,000.00) during each year the credit
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13 is claimed shall be included in the calculation. Provided, that the
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14 first year a credit is claimed for a new employee, such employee may
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15 be included in the calculation notwithstanding paid wages of less
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16 than Seven Thousand Dollars ($7,000.00) if the employee was hired in
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17 the last three quarters of the tax year, has wages or salary which
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18 will result in annual paid wages in excess of Seven Thousand Dollars
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19 ($7,000.00) and the taxpayer submits an affidavit stating that the
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20 employee’s position will be retained in the following tax year and
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21 will result in the payment of wages in excess of Seven Thousand
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22 Dollars ($7,000.00). The number of new employees shall be
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23 determined by comparing the monthly average number of full-time
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24 employees subject to Oklahoma income tax withholding for the final
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 1 quarter of the taxable year with the corresponding period of the
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2 prior taxable year, as substantiated by such reports as may be
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3 required by the Tax Commission.
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4 G. The credit allowed by subsection A of this section shall be
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5 the greater amount of either:
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6 1. One percent (1%) of the cost of the qualified property in
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7 the year the property is placed in service; or
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8 2. Five Hundred Dollars ($500.00) for each new employee. No
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9 credit shall be allowed in any taxable year for a net increase in
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10 the number of full-time-equivalent employees if such increase is a
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11 result of an investment in qualified depreciable property for which
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12 an income tax credit has been allowed as authorized by this section.
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13 H. The credit allowed by subsection B of this section shall be
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14 the greater amount of either:
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15 1. Two percent (2%) of the cost of the qualified property in
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16 the year the property is placed in service; or
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17 2. One Thousand Dollars ($1,000.00) for each new employee.
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18 No credit shall be allowed in any taxable year for a net
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19 increase in the number of full-time-equivalent employees if such
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20 increase is a result of an investment in qualified depreciable
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21 property for which an income tax credit has been allowed as
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22 authorized by this section.
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 1 I. Except as provided by subsection G of Section 3658 of this
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2 title, any credits allowed but not used in any taxable year may be
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3 carried over in order as follows:
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4 1. To each of the four (4) years following the year of
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5 qualification;
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6 2. To For property placed in service before January 1, 2024, or
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7 a net increase in the number of full-time-equivalent employees in a
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8 manufacturing operation, to the extent not used in those years in
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9 order to each of the fifteen (15) years following the initial five-
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10 year period;
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11 3. If a C corporation that otherwise qualified for the credits
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12 under subsection A of this section subsequently changes its
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13 operating status to that of a pass-through entity which is being
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14 treated as the same entity for federal tax purposes, the credits
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15 will continue to be available as if the pass-through entity had
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16 originally qualified for the credits subject to the limitations of
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17 this section;
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18 4. To the extent not used in paragraphs 1 and 2 of this
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19 subsection, such credits from qualified depreciable property placed
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20 in service on or after January 1, 2000 and before January 1, 2024,
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21 may be utilized in any subsequent tax years after the initial
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22 twenty-year period; and
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23 5. To the extent not used in paragraph 1 of this subsection,
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24 credits from qualified depreciable property placed in service on or
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 1 after January 1, 2024, may be carried forward in order to each of
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2 the seven (7) years, following the initial five-year period, upon
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3 the filing of a claim on a form prescribed by the Tax Commission for
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4 each year the credit is carried forward. The form prescribed shall
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5 require the claimant to attest whether the property is still in use;
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6 and
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7 6. Provided, for tax years beginning on or after January 1,
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8 2016, and ending on or before December 31, 2018, the amount of
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9 credits available as an offset in a taxable year shall be limited to
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10 the percentage calculated by the Tax Commission pursuant to the
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11 provisions of subsection L of this section.
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12 J. No credit otherwise authorized by the provisions of this
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13 section may be claimed for any event, transaction, investment,
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14 expenditure, or other act occurring on or after July 1, 2010, for
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15 which the credit would otherwise be allowable until the provisions
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16 of this subsection shall cease to be operative on July 1, 2012.
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17 Beginning July 1, 2012, the credit authorized by this section may be
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18 claimed for any event, transaction, investment, expenditure, or
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19 other act occurring on or after July 1, 2010, according to the
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20 provisions of this section; provided, credits accrued during the
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21 period from July 1, 2010, through June 30, 2012, shall be limited to
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22 a period of two (2) taxable years. The credit shall be limited in
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23 each taxable year to fifty percent (50%) of the total amount of the
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24 accrued credit. Any tax credits which accrue during the period of
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 1 July 1, 2010, through June 30, 2012, may not be claimed for any
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2 period prior to the taxable year beginning January 1, 2012. No
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3 credits which accrue during the period of July 1, 2010, through June
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4 30, 2012, may be used to file an amended tax return for any taxable
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5 year prior to the taxable year beginning January 1, 2012.
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6 K. Beginning January 1, 2017, except with respect to tax
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7 credits allowed from investment or job creation occurring prior to
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8 January 1, 2017, the credits authorized by this section shall not be
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9 allowed for investment or job creation in electric power generation
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10 by means of wind as described by the North American Industry
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11 Classification System, No. 221119.
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12 L. For tax years beginning on or after January 1, 2016, and
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13 ending on or before December 31, 2018, the total amount of credits
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14 authorized by this section used to offset tax shall be adjusted
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15 annually to limit the annual amount of credits to Twenty-five
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16 Million Dollars ($25,000,000.00). The Tax Commission shall annually
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17 calculate and publish a percentage by which the credits authorized
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18 by this section shall be reduced so the total amount of credits used
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19 to offset tax does not exceed Twenty-five Million Dollars
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20 ($25,000,000.00) per year. The formula to be used for the
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21 percentage adjustment shall be Twenty-five Million Dollars
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22 ($25,000,000.00) divided by the credits used to offset tax in the
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23 second preceding year.
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 1 M. Pursuant to subsection L of this section, in the event the
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2 total tax credits authorized by this section exceed Twenty-five
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3 Million Dollars ($25,000,000.00) in any calendar year, the Tax
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4 Commission shall permit any excess over Twenty-five Million Dollars
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5 ($25,000,000.00) but shall factor such excess into the percentage
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6 adjustment formula for subsequent years.
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7 N. The credit provided for in subsections A and B of this
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8 section, for qualified depreciable property placed in service on or
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9 after January 1, 2024, shall not be claimed unless an application
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10 for the credit is approved by the Oklahoma Department of Commerce.
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11 The application shall be submitted to the Department on a form
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12 prescribed by the Department within sixty (60) days of the property
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13 placement in service. The Department shall notify the Tax
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14 Commission upon approval of the application that the taxpayer is
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15 eligible to claim the credit.
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16 SECTION 2. This act shall become effective November 1, 2023.
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18 59-1-152 QD 1/12/2023 6:52:02 PM
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