PORTFOLIO

Credits and Incentives: Alabama Through Hawaii (Portfolio 1450)

Be a trusted advisor to your clients with Bloomberg BNA Tax Portfolios. In this Portfolio, our expert authors focus on state tax credits and incentives in Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, and Hawaii.

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DESCRIPTION

The Credits and Incentives: Alabama Through Hawaii Portfolio contains a detailed discussion of the tax credits and incentives currently available to businesses on a state–by–state basis.

 

This Portfolio also addresses the issues of constitutionality, effectiveness, and the initiatives and policy directions states have taken with respect to existing programs.

 

The working paper section of the Portfolio contains maps and descriptions of targeted economic development zones, where available, and a listing of state and local economic development authority contacts. These materials will help the reader determine if a proposed site lies within a targeted economic development zone.


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AUTHORS

MARK L. NACHBAR, ESQ., CPA

Mark L. Nachbar, Esq., CPA is currently a principal with Ryan in Chicago, Illinois.

 


Credentials / Mark received his B.S.M., Tulane University (1979); J.D., University of Illinois, College of Law (1982); Certified Public Accountant (Illinois, 1979); member: Tax Management, State Tax Advisory Board; Chicago Bar Association, State and Local Tax Committee; Illinois Bar Association. 

 


SCOTT A. AVERY

Credentials / Scott received his B.S.B.A. from the University of Arizona (1989).

 


BRENT J. HAWKINS

Credentials / Brent received his B.A. from Brigham Young University (1992); M.S. Brigham Young University (1993).

 


TABLE OF CONTENTS

Detailed Analysis

1450.01. INTRODUCTION

1450.02. GENERAL ECONOMIC INCENTIVES

Introductory Material

A. Investment Credit

B. Jobs Credit

C. Research and Development Credits

D. Energy Credit

E. Targeted Economic Development Area Credit

F. Sales and Use Tax Incentives

G. Property Tax Incentives

H. Other Incentives

1450.03. CONSTITUTIONAL ISSUES

Introductory Material

A. Equal Protection Clause

B. Commerce Clause

1. Boston Stock Exchange

2. Maryland v. Louisiana

3. Westinghouse Electric Corp.

4. Bacchus Imports, Ltd. v. Dias

5. West Lynn Creamery, Inc. v. Healy

6. Perini Corp. v. Commissioner

7. Northwest Airlines, Inc. v. Wisconsin Dept. of Rev.

8. Cuno v. DaimlerChrysler Inc.

1450.04. CREDITS AND INCENTIVES: DO THEY WORK

Introductory Material

A. Factors Affecting Business Location Decisions

B. When Taxes Become a Factor

C. Credits as a Competitive Factor

D. The Cost of Credit and Incentive Programs

1450.05. STATE INITIATIVES AND POLICY DIRECTIONS

Introductory Material

A. Cost Benefit Analysis

B. Clawbacks

C. Strategic Analysis

1450.06. ALABAMA

A. Capital Credit

B. Enhanced Capital Credit

C. Enterprise Zone Credits

1. In General

2. Section 5 Incentives

a. New Employment

b. Credit for Expenses of Training New Employees

c. Credit for New Investments

3. Section 11 Incentives

a. Exemption From Income and Franchise Tax

b. Exemption From Sales and Use Tax

D. Other Development Incentives

1. Film Industry Tax Incentives

2. Incentives for Insurance Companies Investing in Small Technology-Related Businesses

E. Miscellaneous Credits

1. Approved Basic Skills Education Credit

2. Mined Coal Credit

3. Brownfield Development Incentive Program

4. Entertainment Industry Incentives

a. Rebates for Expenditures

b. Sales, Use, and Lodging Taxes Exemption

1450.07. ALASKA

A. Federal Credits

B. Natural Resources Exploration Credits and Incentives

1. Oil and Gas Exploration Credit

2. Mining Exploration Credit

3. Gas Exploration and Development Credit

4. Oil and Gas Exploration Qualified Capital Expenditures Credit

5. Alternative Oil and Gas Exploration Credit

C. Educational Institutions Credit

D. Deteriorated Property Tax Exemption or Deferral

E. Salmon Product Development and Utilization Tax Credits

F. Gasline Inducement Incentives

G. Additional Nontransferable Credits

H. Film Production Credit

1450.08. ARIZONA

A. Business Location Credits and Incentives

1. Enterprise Zone Income Tax Credit

2. Enterprise Zone Property Tax Incentive

B. TANF Employment Credit

C. Environmental Credits and Incentives

1. Environmental Technology Facility Credit

2. Environmental Technology Facility Transaction Tax Incentives

3. Environmental Technology Facility Property Tax Incentives

4. Pollution Control Equipment Credit

5. Pollution Control Equipment Property Tax Incentives

6. Underground Storage Tank Credit

7. Solar Heating and Electric Vehicle Recharge Outlets

8. Credit for New Alternative Fuel Vehicles

9. Credit for Vehicle Refueling Apparatus

10. Credit for Alternative Fuel Delivery Systems

11. Recycling Equipment Credit

12. Agricultural Water Conservation System Credit

D. Defense Industry Incentives

1. Defense Contractor Employment Credit

2. Defense Contractor Property Tax Credit

3. Military Reuse Zone Employment Credit

4. Military Reuse Zone Transaction Tax Exemption

5. Military Reuse Zone Property Tax Incentives

E. Miscellaneous Credits and Incentives

1. Credit for Increased Research Activities

2. Credit for Donation of School Site

3. Credit for Employment by a Healthy Forest Enterprise

4. Motion Picture Production Tax Credit

5. Motion Picture Infrastructure Project Tax Credit

6. Tuition Donations Credit

F. Transaction Privilege and Use Tax Incentives

1. Moviemaking and Television Commercial Tax Rebates

2. Moviemaking and Television Commercial Tax Exemptions

3. Groundwater Monitoring Wells and Hazardous Waste Cleanup Exemption

4. Coal Consumption Credit

G. Financial Assistance Programs

1. Commerce and Economic Development Commission

2. Revolving Energy Loans for Arizona

3. Employer Credit for Technology Training

1450.09. ARKANSAS

A. Economic Development Credits Under The 2003 Consolidated Incentive Act

1. Job Creation Credit

2. Incentives for Targeted Businesses

a. Income Tax Credit

b. Sales and Use Tax Refund

3. Tax Credit for In-House Research and Development

4. Payroll Rebate

5. Investment Tax Incentives

a. Investment Income Tax Credit

b. Retention Tax Credit

c. Expanding Business Sales and Use Tax Refund

B. Tourism Project Development Credit

1. Sales Tax Credit

2. Income Tax Credit

C. Enterprise Zone Act of 1993

1. Income Tax Credits

2. Sales and Use Tax Refunds

D. Economic Development Incentives

1. Economic Development Credits

2. Manufacturer's Investment Tax Credit

3. Economic Development Incentive Program

E. Environmental Credits

1. Water Resource Conservation Credit

2. Wetland and Riparian Zone Credits

a. Wetland and Riparian Zone Creation and Restoration Credit

b. Wetland and Riparian Zone Conservation Credit

3. Waste Reduction and Recycling Equipment Credit

F. Energy Credits

1. Biofuels Facility Credit

G. County and Regional Industrial Development Company Incentives

1. Stock Purchase Credit

2. Income Tax Exemption

H. Research and Development Credits

1. Biotechnology Industry Credits

2. Extended Net Operating Loss Carryover

I. Emerging Technology Development Credit

J. Miscellaneous Credits

1. Youth Apprenticeship Program

2. Low-Income Housing Credit

3. Affordable Neighborhood Housing Credit

4. Donations or Sales of Equipment to Educational Institutions

5. Employer-Provided Childcare

6. Public Roads Incentive Fund Tax Credit

7. Arkansas Existing Workforce Training Program

8. Tuition Reimbursement Credit

9. Coal Mining Tax Credit

10. Rice Straw Credit

11. Purchase of Equity in a Capital Development Company Income Tax Credit

12. Geotourism Investment Credit

13. Historic Rehabilitation Credit

14. Digital Product and Motion Picture Incentives

15. Cigarette Receptacle Credit

K. Nonprofit Organization Incentives

L. Sales and Use Tax Incentives

1450.10. CALIFORNIA

A. Credits in General

B. Employment Credits

1. Jobs Tax Credit

2. Prison Inmate Labor Credit

3. New Jobs Credit

C. Research and Manufacturing Credits

1. Research Expense Credit

2. Manufacturing Investment Credit

a. “Qualified Costs”

b. “Qualified Property”

c. “Process”

D. Credits for Location of Business Facilities in Targeted Areas

1. Enterprise Zone Credits

a. Qualified Wages

b. Qualified Wages for the Long Beach Enterprise Zone

c. Sales Tax Paid on Machinery

d. Property Deduction

e. Interest Received Deduction

f. Net Operating Loss Deduction

2. Los Angeles Revitalization Zone Credits (LARZ)

a. Wages

b. Sales Tax Paid on Machinery

c. Property Deduction

d. Interest Received Deduction

e. Net Operating Loss Deduction

3. Military Base Recovery Areas Credits (LAMBRA)

a. Wages

b. Sales Tax Paid on Machinery

c. Property Deduction

d. Net Operating Loss Deduction

4. Targeted Tax Areas

a. Qualified Wage Credit

b. Expense Deduction for Targeted Tax Area Property

c. Sales and Use Tax Credit

d. Net Operating Loss Deduction

5. Manufacturing Enhancement Area

a. Qualified Wage Credit

E. Dependent Care Credits

1. Credit for Child Care Facility Start-Up Expenses

2. Employer's Credit for Contributions to Care Plan

F. Pollution Control Credits

1. Solar Energy System Credit

2. Enhanced Oil Recovery Credit

G. Low Income Housing Credit

H. Miscellaneous Credits

1. Agricultural Property Transportation Credit

2. Farmworker Housing Construction and Rehabilitation Credits and Income Exclusion

3. Rice Straw Credit

4. Disabled Individuals Eligible Expense Access Credit

5. Community Development Investment Credit

6. Joint Strike Fighter Credits

a. Wage Credit

b. Investment Credit

7. Steelhead Trout Restoration and Improvement Credit

1450.11. COLORADO

A. Investment Credits and Incentives

1. New Colorado Investment Tax Credit

2. Old Colorado Investment Tax Credit

3. Child and Family Care Facility Investment Tax Credit

4. Child Care Facilities Credit

5. School-to-Career Investment Tax Credit

6. Impact Assistance Contribution Credits

7. Colorado Works Program Investment Credit

8. Local Tax Incentives

9. Insurance Company Certified Capital Company Credit

10. Insurance Company Credit for Contributions to CoverColorado

11. Aircraft Manufacturer New Employee Credit

B. Enterprise Zone Credits and Incentives

1. Investment Tax Credit

2. New Business Facility Employee Credit

3. Enhanced Rural Enterprise Zone Credit

4. Employer-Sponsored Health Insurance

5. Agricultural Processing Employee Credit

6. Contributions to Zone Administrators

a. Child Care

b. Housing

7. Rehabilitation of Vacant Buildings

8. Research and Development Credit

9. Job Training Program Investment Credit

10. Sales Tax Incentives

11. Property Tax Incentives

12. Rural Technology Enterprise Zone Credit

C. Environmental Credits and Incentives

1. Increase Purchase for Colorado Coal

2. Alternative Fuels Vehicles Tax Credit

3. Alternative Fuel Vehicle Rebate

4. Energy-Conservation Loans Credit

5. Conservation Easement Income Tax Credit

6. Brownfield Redevelopment Credit

D. Miscellaneous Credits

1. Preservation of Historical Property

2. Crop and Livestock Contribution Credit

3. Research and Development Sales Tax Refund

4. Agricultural Value-Added Tax Credit

5. Low-Income Housing Tax Credit

6. Credit for Contributions to High Technology Scholarship Program

E. Financial Assistance Programs

1450.12. CONNECTICUT

Introductory Material

A. Procedure for Claiming Connecticut Tax Credits

1. Ordering Rules for Credits

2. Combined Tax Credits

B. Job Creation and Investment Tax Credits

1. Enterprise Zone Tax Credit

2. Human Capital Investment Credit

3. Fixed Capital Tax Credit

4. Hiring Incentive Tax Credit

5. Apprenticeship Training Tax Credit

6. Insurance Reinvestment Fund Credit

7. Financial Institutions Credit

8. Displaced Electric Worker Credit

9. Displaced Worker Credit

10. Job Creation Credit

C. Environmental Tax Credits

1. Clean Alternative Fuel Credit

2. Urban and Industrial Site Reinvestment Credit

3. Donation of Open Space Land Credit

D. Research and Development Tax Credits

1. Non-Incremental Research and Development Credit

2. Incremental Research and Development Credit

3. Research and Development Credit for Grants to Institutions of Higher Education

4. Exchange of R& D Credits

E. Machinery and Equipment Tax Credits

1. Machinery and Equipment Expenditure Credit

2. Manufacturing Facility and Service Facility Credits

a. Manufacturing Facility Credit Percentage

b. Definition of a Manufacturing Facility

c. Service Facility Credit Percentage

d. Definition of a Service Facility

e. Determination of Tax Allocable to a Manufacturing or Service Facility

f. Occupancy and Transferability Requirements

F. Technology Tax Credits

1. Computer Donation Credit

2. Electronic Data Processing Property Tax Credit

G. Housing and Community Tax Credits

1. Historic Homes Rehabilitation Credit

2. Neighborhood Assistance Tax Credit

3. Housing Program Contribution Credit

4. Employer-Assisted Housing Tax Credit

5. Energy Conservation and Job Training

6. Child Daycare Facility Credit

7. Mixed Use Historic Preservation Credit

H. Entertainment Industry Credits

1. Film Production Tax Credit

2. Digital Animation Production Credit

3. Entertainment Industry Infrastructure Project Credit

I. Other Credits and Incentives

1. Small Business Guaranty Fee Tax Credit

2. Traffic Reduction Programs Credit

3. Open Space Tax Exemption

1450.13. DELAWARE

A. New, Expanded or Replacement Facility Tax Credits

1. Expansion With Employment

2. Expansions Without Employment

3. Replacement Facilities

B. Targeted Area Tax Credits

C. Pollution Credits

1. Use of Recycled Materials

2. Reduction in Waste Release

3. Processing of Waste Materials

4. Collection and Distribution of Recycled Materials

D. Mitigation of Commuter Traffic

E. Research and Development Credit

F. Neighborhood Assistance Tax Credit

G. Historic Preservation Tax Credit

H. New Economy Jobs Credit

1450.14. DISTRICT OF COLUMBIA

A. Economic Development Zone Credits

1. Employment Credit

2. Worker's Compensation Insurance Premiums Credit

3. Daycare Rental Income Credit

B. Net 2000 High Technology Company Credits

1. Net 2000 Relocation Expense Reimbursement

2. Net 2000 Franchise Tax Reduction

3. Net 2000 Computation Incentives

a. Capital Gain Exclusion

b. Election to Expense Certain Depreciable Business Assets

4. Net 2000 Employment Credits

a Credit for Wages Paid to Qualified Employees

b. Credit for Wages Paid to Qualified Disadvantaged Employees

c. Credit for Retraining Costs for Qualified Disadvantaged Employees

1450.15. FLORIDA

A. Priority of Credits

B. Enterprise Zone Credits and Incentives

1. Jobs Credit

2. Enterprise Zone Property Tax Credit

3. Community Contributions Tax Credit

4. Enterprise Zone Sales and Use Tax Incentives

a. Jobs Tax Credit

b. Building Material Tax Refund

c. Tangible Property Tax Refunds

d. Utility Tax Exemption

C. ENTRY Program

D. Urban High-Crime and Rural Area Jobs Credits

E. Targeted Business Incentive Program

F. Defense Contractor and Space Flight Business Incentives

G. Capital Investment Credit

H. Environmental Credits

1. Hazardous Waste Facility Owner Credit

2. Contaminated Site Rehabilitation Credit

I. Special Industry Credits

1. Health Maintenance Organizations

2. Offset of Income Tax or Premiums Tax

3. Certified Capital Company Credit

J. Credits Resulting From Taxes Other Than Income

1. Credit for Emergency Excise Tax

2. Credit for Alternative Minimum Tax

K. Financial Assistance Programs

1. Enterprise Bonds

2. Export Financing

3. Recycling Loan Program

4. Other Programs

L. Energy Credits

1. Renewable Energy Technologies Investment Credit

2. Renewable Energy Production Credit

M. Miscellaneous Credits and Incentives

1. Child Care Credit

2. Low-Income Housing Tax Credit

3. Research and Development Exemption

4. High-Impact Performance Incentive Grant Program

5. Credit for Contributions to Nonprofit Scholarship-Funding Organizations

6. Entertainment Industry Financial Incentive Program

a. General Production Queue

b. Independent Florida Filmmaker Queue

c. Digital Media Projects Queue

1450.16. GEORGIA

Introductory Material

A. General Principles

1. “Business Enterprise” Defined

2. “Existing Business Enterprise” Defined

3. Tiers and Less Developed Areas

4. Priority/Carryover of Credits

5. Assignment of Credits to Affiliates

B. Enterprise Zone Tax Credits and Incentives

1. Employer-Provided Transportation Tax Credit

2. Manufacturing and Telecommunications Investment Tax Credit

3. Optional Investment Tax Credit

4. Jobs Tax Credit

5. Local Credits and Incentives

C. Job Creation/Training Tax Credits

1. Qualified Business Expansion Tax Credit

2. Basic Skills Education Tax Credit

3. Retraining Tax Credit

D. Environmental Tax Credits

1. Water Conservation Facilities/Qualified Water Conservation Investment Tax Credit

2. Shift From Ground-Water Usage Tax Credit

3. Low-Emission Vehicles Tax Credit

4. Diesel Particulate Emission Reduction Technology Equipment Tax Credit

5. Clean Energy Property Credit

6. Transportation of Wood Residuals to Biomass Facility Credit

E. Economic Development Tax Credits

1. Increased Exports Tax Credit

2. Taxable Net Income Growth Tax Credit

3. Cigarette Exports Tax Credit

4. Headquarters Tax Credit

5. Manufacturing Facility Tax Credits

a. Jobs Tax Credit

b. Investment Tax Credit

F. Research and Development Credits

1. Qualified Research Expense Credit

2. Research Fund Investment Credit

G. Employer Credits

1. Federal Qualified Transportation Fringe Benefits Credit

2. Employer-Provided Child Care Credit

3. Credit for Telework Expenses

4. Small Employer Health Insurance Expense Credit

H. Miscellaneous Tax Credits

1. Historic Property Rehabilitation Credit

2. Low-Income Housing Credit

3. Rural Physician Credit

4. Georgia Entertainment Industry Investment Act Credit

5. Credit for Conservation Land Donation

6. Qualified Education Expense Credit

1450.17. HAWAII

A. Enterprise Zone Credits

1. Income Tax Credit

2. Unemployment Tax Credit

3. General Excise Tax Exemption

4. Local Zone Incentives

B. Low-Income Housing Credit

C. Energy Credits

1. Energy Conservation Credit

2. Renewable Energy Technologies Credit

3. Ethanol Facility Tax Credit

D. Employment of Vocational Rehabilitation Referrals

E. Hotel Remodeling Tax Credit

F. Film Industry Incentives

1. Income Tax Exemption

2. Movie Production Tax Credit

G. High-Technology Credits

1. High-Technology Business Investment Credit

2. High-Technology Business Research Activities Credit

3. Technology Enabling Infrastructure Remodeling Tax Credit

H. Miscellaneous Credits

1. Fuel Tax Credit For Commercial Fishers

2. Capital Goods Excise Tax Credit

3. Attractions and Educational Facilities Credit

4. Important Agricultural Land Agricultural Costs Credit

5. Drought Mitigating Water Storage Facility Tax Credit


WORKING PAPERS

Working Papers

Item Description Sheet

Worksheet 1 State Tax Credits and Incentives: Agency Directory

Worksheet 2 Chart of Alabama Enterprise Zones

Worksheet 3 Chart of Arizona Enterprise Zones

Worksheet 4 Chart of California Enterprise Zones

Worksheet 5 Chart of Colorado Enterprise Zones

Worksheet 6 Chart of Connecticut Enterprise Zones

Worksheet 7 Chart of Florida Enterprise Zones

Worksheet 8 Chart of Georgia Job Tax Credit

Worksheet 9 Chart of Hawaii Enterprise Zones

Bibliography

Bibliography