77th OREGON LEGISLATIVE ASSEMBLY--2013 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 1155
House Bill 3211
Sponsored by Representative CONGER
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
Establishes income and excise tax credit for employers doing
business in traded sector, based on increase in annual payroll.
Provides for certification by Oregon Business Development
Department of employers participating in Oregon Payroll-Based
Incentive Program. Authorizes department to certify employers on
or after October 1, 2013, and on or before December 31, 2017.
Authorizes department to issue rebates of incremental Oregon
Payroll-Based Incentive tax revenues to certified employers.
Specifies provisions of rebates.
Establishes Oregon Payroll-Based Incentive Fund. Continuously
appropriates moneys in fund to department.
Appropriates moneys from General Fund to department for
purposes of establishing and administering program.
Specifies rate of withholding on taxable income of person
employed by certified employer.
Applies to tax years beginning on or after January 1, 2014.
Takes effect on 91st day following adjournment sine die.
A BILL FOR AN ACT
Relating to incentives for business hiring; creating new
provisions; amending ORS 314.752 and 318.031; appropriating
money; and prescribing an effective date.
Be It Enacted by the People of the State of Oregon:
SECTION 1. { + Sections 2 to 8 of this 2013 Act are added to
and made a part of ORS chapter 285C. + }
SECTION 2. { + As used in sections 2 to 8 of this 2013 Act:
(1) 'Annual full-time equivalent employment' means the number
that results from dividing by 2,080 the total number of hours for
which any employed person receives pay in a year.
(2) 'Annual gross payroll' means wages, salaries and other
remuneration paid in a year to persons employed by a certified
employer, or to a licensed worker leasing company contracting
with the employer to provide workers, and payments in the year
for workers' compensation, payroll taxes, pension or other
retirement plan contributions, health or other insurance premiums
and other similar benefits for such persons employed by the
employer, or the licensed worker leasing company, excluding
executive officers or employees who own a five percent or greater
share in the employer.
(3) 'Business firm' has the meaning given that term in ORS
285C.050.
(4) 'Certified employer' means an eligible employer that has
been certified under sections 3 and 4 of this 2013 Act.
(5) 'Compensation' has the meaning given that term in ORS
314.610.
(6) 'Eligible employer' means an employer that is a business
firm that, in the month in which the employer submits an
application under section 4 of this 2013 Act:
(a) Has at least 150 employees in this state;
(b) Averages $60,000 annually in per-employee compensation,
including the cost of benefits;
(c) Plans to hire at least 50 new full-time, year-round
employees in this state within six months; and
(d) Operates in an industry in the traded sector, as that term
is defined in ORS 285B.280.
(7) 'Incremental Oregon Payroll-Based Incentive tax revenues'
means:
(a) The Oregon personal income tax revenues that are generated
from the Oregon personal income tax liabilities shown on the
income tax returns filed by persons hired by certified employers
in the two consecutive tax years beginning with the tax year in
which the employer receives certification under section 4 of this
2013 Act, including revenues that are generated from the tax
liabilities of spouses of persons employed by certified employers
if the tax liabilities are reported on a joint return; or
(b) If Oregon personal income tax rates are reduced after the
dates of the rebate agreements described in section 13 of this
2013 Act and the rebate agreements provide that payments will be
based on rates in effect when the rebate agreements are executed,
the Oregon personal income tax revenues generated from the tax
liabilities, as described in paragraph (a) of this subsection,
that would have been due if the tax liabilities were calculated
using personal income tax rates in effect on the date of
execution of the rebate agreements.
(8) 'Per capita personal income' means the annual per capita
personal income level published by the Bureau of Economic
Analysis of the United States Department of Commerce for a county
or state at the time an employer is certified under sections 3
and 4 of this 2013 Act.
(9) 'Tax liabilities' means the tax determined under ORS
chapter 316 for the tax year, less the credits allowed for
purposes of ORS chapter 316 for the tax year. + }
SECTION 3. { + (1) Subject to standards and procedures that
the Oregon Business Development Department establishes by rule,
the department shall certify eligible employers to participate in
the Oregon Payroll-Based Incentive Program established in section
13 of this 2013 Act and to claim the income or excise tax credit
allowed under section 11 of this 2013 Act. The department may
establish standards:
(a) Requiring that employers maintain certain levels of payroll
or per-employee compensation, including benefits, for at least
five years;
(b) Requiring that employers consult with vendors and
contractors in this state before entering into contracts;
(c) Ensuring that eligible employers do not lay off current
employees in order to achieve hiring goals;
(d) Specifying the types and amounts of employer expenses that
are the reasonable costs of financing, developing, furnishing and
operating a facility to be used in the course of business by the
certified employer as required under section 13 of this 2013 Act;
and
(e) For verifying that an employer is an eligible employer.
(2) Prior to issuing a certification under this section, the
department shall enter into a rebate agreement with the eligible
employer as described in section 13 of this 2013 Act. The rebate
agreement must contain a statement by the eligible employer that
the eligible employer would not have hired 50 or more new
employees but for the availability of the program established
under section 13 of this 2013 Act. The rebate agreement must
contain detailed performance measures with which the eligible
employer must comply.
(3) The department shall approve or disapprove an application
under this section within 120 days after the date the application
is filed. + }
SECTION 4. { + (1) An employer seeking to participate in the
Oregon Payroll-Based Incentive Program and to claim the
accompanying income or excise tax credit allowed under section 11
of this 2013 Act shall apply to the Oregon Business Development
Department for certification under this section.
(2) The application must be on a form prescribed by the Oregon
Business Development Department and must contain the following
information:
(a) The locations or proposed locations at which the employer
is or will be doing business;
(b) A description of new or expanded operations to be conducted
by the employer and the intended duration of such operations;
(c) For the 12 months preceding the application for
certification, the average number of full-time, year-round
employees of the employer in this state;
(d) The intended number of full-time, year-round employees to
be hired, average annual gross payroll and annual full-time
equivalent employment for the proposed new or expanded operations
of the employer;
(e) A description of any other business activities of the
employer in this state at the time of the application;
(f) The proposed amount of new investment by the employer in
facility improvements; and
(g) Any other information the department requires.
(3) An application filed under this section must be accompanied
by a fee in an amount prescribed by the Oregon Business
Development Department. The fee required under this subsection
must not exceed $5,000.
(4) When an application is filed under this section, the Oregon
Business Development Department shall review the application and
determine whether:
(a) The employer is doing business in a traded sector, as
defined in ORS 285B.280;
(b) The employer will do business in this state for at least 10
years following the date the certification is issued;
(c) Prior to certification, the employer will hire additional
employees, with a net gain of at least 50 full-time, year-round
employees;
(d) The increase in annual gross payroll of the employer in any
county divided by the change in annual full-time equivalent
employment of the employer in that county will equal or exceed
125 percent of the county per capita personal income or this
state's per capita personal income, whichever is less;
(e) The employer demonstrates capacity and commitment to
utilize in-state vendors and contractors; and
(f) The employer is likely to have a positive return on
investment in terms of public resources consumed and public
revenues generated over the next 15 years.
(5) Prior to issuing a certification under subsection (6) of
this section, the Oregon Business Development Department shall
enter into a performance agreement with the employer. The
agreement must contain a statement by the employer that the
employer would not have increased its annual gross payroll but
for the availability of the credit allowed under section 11 of
this 2013 Act. The agreement must contain detailed performance
measures the employer must comply with related to the
requirements of section 11 of this 2013 Act.
(6) The Oregon Business Development Department shall issue a
certification to the employer, and furnish a copy to the
Department of Revenue, if the Oregon Business Development
Department determines:
(a) The employer satisfies the requirements for certification
described in subsection (4) of this section if the employer
operates as described in the application filed under this
section;
(b) The employer is performing according to the performance
agreement required under subsection (5) of this section; and
(c) The application does not relate to a facility that is
certified for a tax credit under ORS 317.124.
(7) The certification issued by the Oregon Business Development
Department pursuant to subsection (6) of this section must
specify:
(a) The current county per capita personal income of the
counties in which the employer is doing business.
(b) The following information related to the employer, as
disclosed in the application as existing at the time of the
application:
(A) The number of full-time, year-round employees;
(B) The annual gross payroll; and
(C) The annual full-time equivalent employment in this state.
(c) The percentage amount of credit allowed to the employer,
and the term over which it may be claimed, as provided in section
11 (2) of this 2013 Act.
(d) Any other information that the department deems
appropriate.
(8) If the Oregon Business Development Department determines
that the employer does not meet the requirements for
certification described in subsection (4) of this section, the
department may not issue a certification.
(9) A decision of the Oregon Business Development Department to
decline to issue a certification under this section may be
appealed in the same manner as a contested case under ORS chapter
183. The failure of the department to issue a certification
within the time period required under subsection (10) of this
section is not appealable if the failure to issue the
certification results from a limitation on the number of
certifications permitted by law.
(10) The Oregon Business Development Department shall approve
or disapprove an application under this section within 60 days
after the date that the employer demonstrates to the department
that the employer has hired the number of employees indicated in
the application. + }
SECTION 5. { + The Oregon Business Development Department may
adopt administrative rules that the department determines are
necessary to:
(1) Further define the terms defined in section 2 of this 2013
Act in a manner consistent with section 2 of this 2013 Act;
(2) Implement the duties of the department under sections 2 to
8 of this 2013 Act; and
(3) Carry out the purposes of sections 2 to 8 of this 2013
Act. + }
SECTION 6. { + (1) Pursuant to the procedures for a contested
case under ORS chapter 183, the Oregon Business Development
Department may order the revocation of a certification under
sections 3 and 4 of this 2013 Act if the department finds that:
(a) The certification was obtained by fraud or
misrepresentation; or
(b) The employer fails to meet the requirements of sections 3
and 4 of this 2013 Act.
(2) As soon as the order of revocation under this section has
become final, the Oregon Business Development Department shall
notify the Department of Revenue of the order.
(3) If the certification is ordered revoked pursuant to
subsection (1) of this section, the Oregon Business Development
Department shall proceed to recover any rebate moneys disbursed
to the employer pursuant to section 13 of this 2013 Act. + }
SECTION 7. { + A certified employer with a facility certified
for a tax credit under ORS 317.124 does not qualify for
certification for a tax credit under section 11 of this 2013 Act.
The Oregon Business Development Department shall issue a
revocation of certification under sections 3 and 4 of this 2013
Act to the employer and furnish a copy of the revocation to the
Department of Revenue. + }
SECTION 8. { + The Oregon Business Development Department may
issue certifications under sections 3 and 4 of this 2013 Act for
applications received on or after October 1, 2013, and on or
before December 31, 2017. + }
SECTION 9. { + Sections 10 to 12 of this 2013 Act are added to
and made a part of ORS chapter 315. + }
SECTION 10. { + As used in sections 10 to 12 of this 2013 Act,
' annual full-time equivalent employment,' 'annual gross
payroll,' 'certified employer' and 'per capita personal income'
have the meanings given those terms in section 2 of this 2013
Act. + }
SECTION 11. { + (1) A credit against taxes that are otherwise
due under ORS chapter 316 or, if the taxpayer is a corporation,
under ORS chapter 317 or 318, is allowed to a taxpayer that is a
certified employer, if the taxpayer establishes that:
(a) The taxpayer is doing business in a traded sector, as
defined in ORS 285B.280;
(b) The taxpayer will do business in this state for at least 10
years following the date the certification is issued;
(c) The annual average number of full-time, year-round
employees of the taxpayer in this state has increased by 50 or
more employees since the date of application for certification
under section 4 of this 2013 Act; and
(d) Since the date of application for certification under
section 4 of this 2013 Act, the increase in annual gross payroll
of the taxpayer in any county divided by the change in annual
full-time equivalent employment of the taxpayer in that county is
equal to or greater than 125 percent of the county per capita
personal income.
(2) The credit allowed under this section:
(a) Is based on the increase in the annual gross payroll of the
taxpayer in the tax year relative to the taxpayer's annual gross
payroll at the time of application for certification under
section 4 of this 2013 Act, and shall equal up to 25 percent, but
at least 15 percent, of the increase in annual gross payroll.
(b) May be claimed for each of at least three but no more than
five successive tax years, of which the first tax year begins on
or before January 1 of the third calendar year after the year in
which the certification is issued under section 4 of this 2013
Act.
(3) The Oregon Business Development Department may determine
for each applicant the amount of credit and the duration of time
over which it may be claimed, within the limits provided in
subsection (2) of this section.
(4) A taxpayer seeking a credit under this section shall claim
the credit on a form prescribed by the Department of Revenue that
contains, for the tax year for which the credit is claimed, the
following information related to the taxpayer:
(a) The annual average number of full-time, year-round
employees;
(b) The annual gross payroll;
(c) The annual full-time equivalent employment in this state;
and
(d) Any other information required by the department.
(5) In lieu of carrying forward the credit as provided in
subsection (6) of this section, a taxpayer may elect to receive a
refund of not more than 80 percent of the amount by which the
credit exceeds the taxpayer's tax liability.
(6) Except as provided in subsection (5) of this subsection,
any tax credit otherwise allowable under this section that is not
used by the taxpayer in a particular tax year may be carried
forward and offset against the taxpayer's tax liability for the
next succeeding tax year. Any credit remaining unused in the
second succeeding tax year may be carried forward and used in the
third succeeding tax year. Any credit remaining unused in the
third succeeding tax year may be carried forward and used in the
fourth succeeding tax year. Any credit remaining unused in the
fourth succeeding tax year may be carried forward and used in the
fifth succeeding tax year, but may not be used in any tax year
thereafter.
(7)(a) A credit allowed under this section is not in lieu of
any deduction for depreciation, amortization, payroll costs or
any other expense to which the taxpayer may be entitled.
(b) The taxpayer's adjusted basis for determining gain or loss
may not be decreased by any credit allowed under this section.
(c) If a change in the taxable year of a taxpayer occurs as
described in ORS 314.085, or if the department terminates the
taxpayer's taxable year under ORS 314.440, the credit allowed by
this section shall be prorated or computed in a manner consistent
with ORS 314.085.
(d)(A) A nonresident shall be allowed the credit computed under
this section in the same manner and subject to the same
limitations as the credit allowed a resident of this state.
However, the credit shall be prorated using the proportion
provided in ORS 316.117.
(B) If a change in the status of a taxpayer from resident to
nonresident or from nonresident to resident occurs, the credit
allowed by this section shall be determined in a manner
consistent with ORS 316.117. + }
SECTION 12. { + (1) A taxpayer that has claimed a credit under
section 11 of this 2013 Act shall maintain records sufficient to
show:
(a) That the taxpayer continued to operate with an annual
average number of full-time, year-round employees that equals the
number established in the certification under section 4 of this
2013 Act for at least 10 years after the date the Oregon Business
Development Department issued the certification; and
(b) That the taxpayer has met the requirements for
certification described in section 4 (4) of this 2013 Act and the
criteria for allowing and computing the credit under section 11
of this 2013 Act.
(2) The taxpayer shall provide the records required to be
maintained under this section to the Department of Revenue if
requested to do so by the department.
(3) The taxpayer shall maintain the records described in this
section for at least 10 years following the last tax year for
which the taxpayer claims any credit under section 11 of this
2013 Act.
(4) The Department of Revenue shall disallow the credit claimed
under section 11 of this 2013 Act for the current or any prior
tax year, and collect any taxes that were not paid as a result of
application of the credit, if:
(a) The taxpayer is discovered, in violation of subsection (1)
of this section, to have closed or curtailed operations or to
have failed to meet a requirement for certification described in
section 4 (4) of this 2013 Act; or
(b) Certification is revoked under section 6 of this 2013 Act.
(5) For purposes of collecting taxes due under subsection (4)
of this section, the Department of Revenue shall have the benefit
of all laws of this state pertaining to the collection of income
and excise taxes. No assessment of these taxes shall be necessary
and no statute of limitations shall preclude the collection of
these taxes. + }
SECTION 13. { + (1) In consultation with the Department of
Revenue, the Oregon Business Development Department shall
establish and administer the Oregon Payroll-Based Incentive
Program. The purpose of the program is to provide rebates to
certified employers to allow for expanded operations and
increased hiring. The rebates shall be in addition to the tax
credit allowed under section 11 of this 2013 Act and may be
provided to certified employers other than those qualifying for
the tax credit.
(2) The Oregon Business Development Department shall enter into
one or more rebate agreements with certified employers receiving
rebates under this section. The rebate agreements must:
(a) Provide that the rebate moneys may be used only to pay for
the costs of financing, developing, furnishing and operating a
facility to be used by the certified employer in the course of
business.
(b) Require that the certified employer receiving rebate moneys
return to the Oregon Business Development Department, for deposit
in the General Fund, amounts distributed to the certified
employer from the Oregon Payroll-Based Incentive Fund that exceed
the actual incremental Oregon Payroll-Based Incentive tax
revenues for the certified employer, as described in subsection
(3) of this section.
(3) The total rebate amount distributed to a certified employer
under this section may not exceed the total of the estimated
incremental Oregon Payroll-Based Incentive tax revenues for the
certified employer:
(a) For the tax year in which the employer receives
certification under section 4 of this 2013 Act; and
(b) For the tax year following the tax year in which the
employer receives certification under section 4 of this 2013 Act.
(4) Rebate moneys under this section must be distributed to the
certified employer no later than 120 days following certification
under section 4 of this 2013 Act. + }
SECTION 14. { + The Director of the Department of Revenue
shall:
(1) Specify the methodology for estimating incremental Oregon
Payroll-Based Incentive tax revenues;
(2) Estimate incremental Oregon Payroll-Based Incentive tax
revenues; and
(3) Notify the Director of the Oregon Business Development
Department of the estimated incremental Oregon Payroll-Based
Incentive tax revenues. + }
SECTION 15. { + The Oregon Payroll-Based Incentive Fund is
established in the State Treasury, separate and distinct from the
General Fund. The Oregon Payroll-Based Incentive Fund consists of
amounts deposited in the fund as required by section 22 of this
2013 Act and other moneys transferred to the fund. Amounts in the
fund are continuously appropriated to the Oregon Business
Development Department for the purposes of:
(1) Making the rebates provided by the rebate agreements
entered into under section 13 of this 2013 Act;
(2) Making refunds to taxpayers authorized under section 11 of
this 2013 Act;
(3) Reducing the application fees otherwise charged to
applicants under section 4 (3) of this 2013 Act; and
(4) Paying the costs and expenses of the Oregon Business
Development Department and the Department of Revenue in
connection with the implementation and administration of sections
2 to 8, 10 to 12 and 18 to 22 of this 2013 Act. + }
SECTION 16. { + There is appropriated to the + } { + Oregon
Business Development Department, for the biennium beginning July
1, 2013, out of the General Fund, the amount of $___ for the
purpose of carrying out the provisions of section 13 of this 2013
Act. + }
SECTION 17. { + Sections 18 to 22 of this 2013 Act are added
to and made a part of ORS 316.162 to 316.221. + }
SECTION 18. { + As used in sections 18 to 22 of this 2013 Act,
' certified employer' and 'compensation' have the meanings given
those terms in section 2 of this 2013 Act. + }
SECTION 19. { + (1) A certified employer, in lieu of the
withholding requirements under ORS 316.167, shall withhold eight
percent of the wages of employees hired by the certified employer
in each of the two consecutive tax years beginning with the tax
year in which the employer receives certification under sections
3 and 4 of this 2013 Act, as provided in this section and by rule
of the Department of Revenue.
(2) The certified employer withholding amounts under this
section shall pay the amounts withheld to the department at the
time and in the manner prescribed by the department by rule. + }
SECTION 20. { + In addition to other reports and returns
required by law or rule, a certified employer required to
withhold compensation under section 19 of this 2013 Act shall
file an annual report with the Department of Revenue stating:
(1) The total amount of compensation paid during the tax year
to employees hired in that tax year by the certified employer;
(2) The taxpayer identification number of each employee of the
certified employer;
(3) The compensation paid to each employee of the certified
employer; and
(4) The amount withheld under section 19 of this 2013 Act for
each employee hired by the certified employer. + }
SECTION 21. { + (1) The Department of Revenue may adopt
administrative rules that the department determines are necessary
to:
(a) Implement the duties of the department under sections 18 to
22 of this 2013 Act; and
(b) Carry out the purposes of sections 18 to 22 of this 2013
Act.
(2) The rules may include rules construing ORS 316.162 to
316.221 in a manner that is consistent and compatible with the
withholding provisions of sections 18 to 22 of this 2013 Act. + }
SECTION 22. { + The revenues received by the Department of
Revenue under section 19 of this 2013 Act shall be transferred to
the Oregon Payroll-Based Incentive Fund established in section 15
of this 2013 Act. + }
SECTION 23. ORS 314.752 is amended to read:
314.752. (1) Except as provided in ORS 314.740 (5)(b), the tax
credits allowed or allowable to a C corporation for purposes of
ORS chapter 317 or 318 shall not be allowed to an S corporation.
The business tax credits allowed or allowable for purposes of ORS
chapter 316 shall be allowed or are allowable to the shareholders
of the S corporation.
(2) In determining the tax imposed under ORS chapter 316, as
provided under ORS 314.734, on income of the shareholder of an S
corporation, there shall be taken into account the shareholder's
pro rata share of business tax credit (or item thereof) that
would be allowed to the corporation (but for subsection (1) of
this section) or recapture or recovery thereof. The credit (or
item thereof), recapture or recovery shall be passed through to
shareholders in pro rata shares as determined in the manner
prescribed under section 1377(a) of the Internal Revenue Code.
(3) The character of any item included in a shareholder's pro
rata share under subsection (2) of this section shall be
determined as if such item were realized directly from the source
from which realized by the corporation, or incurred in the same
manner as incurred by the corporation.
(4) If the shareholder is a nonresident and there is a
requirement applicable for the business tax credit that in the
case of a nonresident the credit be allowed in the proportion
provided in ORS 316.117, then that provision shall apply to the
nonresident shareholder.
(5) As used in this section, 'business tax credit' means a tax
credit granted to personal income taxpayers to encourage certain
investment, to create employment, economic opportunity or
incentive or for charitable, educational, scientific, literary or
public purposes that is listed under this subsection as a
business tax credit or is designated as a business tax credit by
law or by the Department of Revenue by rule and includes but is
not limited to the following credits: ORS 285C.309 (tribal taxes
on reservation enterprise zones and reservation partnership
zones), ORS 315.104 (forestation and reforestation), ORS 315.138
(fish screening, by-pass devices, fishways), ORS 315.141 (biomass
production for biofuel), ORS 315.156 (crop gleaning), ORS 315.164
and 315.169 (farmworker housing), ORS 315.204 (dependent care
assistance), ORS 315.208 (dependent care facilities), ORS 315.213
(contributions for child care), ORS 315.304 (pollution control
facility), ORS 315.326 (renewable energy development
contributions), ORS 315.331 (energy conservation projects), ORS
315.336 (transportation projects), ORS 315.341 (renewable energy
resource equipment manufacturing facilities), ORS 315.354 and
469B.151 (energy conservation facilities), ORS 315.507
(electronic commerce), ORS 315.533 (low income community jobs
initiative) and ORS 317.115 (fueling stations necessary to
operate an alternative fuel vehicle) { + and section 11 of this
2013 Act (payroll increases) + }.
SECTION 24. ORS 318.031 is amended to read:
318.031. It being the intention of the Legislative Assembly
that this chapter and ORS chapter 317 shall be administered as
uniformly as possible (allowance being made for the difference in
imposition of the taxes), ORS 305.140 and 305.150, ORS chapter
314 and the following sections are incorporated into and made a
part of this chapter: ORS 285C.309, 315.104, 315.141, 315.156,
315.204, 315.208, 315.213, 315.304, 315.326, 315.331, 315.336,
315.507 and 315.533 { + and section 11 of this 2013 Act + }(all
only to the extent applicable to a corporation) and ORS chapter
317.
SECTION 25. { + Sections 2 to 8, 10 to 12 and 18 to 22 of this
2013 Act and the amendments to ORS 314.752 and 318.031 by
sections 23 and 24 of this 2013 Act apply to tax years beginning
on or after January 1, 2014. + }
SECTION 26. { + This 2013 Act takes effect on the 91st day
after the date on which the 2013 regular session of the
Seventy-seventh Legislative Assembly adjourns sine die. + }
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