Massachusetts General Laws - Taxation of Corporations - Chapter 63, Section 38N

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Economic development incentive program; tax credit for certified projects.

Section 38N. (a) A corporation subject to tax under this chapter which participates in a certified project as defined in section three A of chapter twenty-three A, may take a credit against the excise imposed by this chapter in an amount equal to five percent of the cost of any property that qualifies for the credit allowed by section thirty-one A if such property is used exclusively in a certified project within the economic opportunity area as defined in said section three A of said chapter twenty-three A. The credit allowed under this section may be taken by an eligible corporation; provided, however, that neither credit allowed by said section thirty-one A or by section thirty-one H is taken by such corporation. For purposes of this paragraph, the corporation need not be a manufacturing corporation or a business corporation engaged primarily in research and development if such property is disposed of or ceases to be in qualified use within the meaning of section thirty-one A or if such property ceases to be used exclusively in a certified project within an economic opportunity area before the end of its useful life the recapture provisions of subsection (e) of section thirty-one A shall apply.

A credit allowed under this section may be taken only after the taxpayer completes an annual application for the credit, signed under the pains and penalties of perjury by an authorized representative of the corporation, files it with the commissioner of revenue and the commissioner certifies that property eligible for the credit is used in a certified project within the economic opportunity area as defined in said section 3A of said chapter 23A and wholly within an area designated as an economic target area pursuant to section 3D of said chapter 23A and the area conforms to the definition of a “blighted open area”, “decadent area”, or ’‘sub-standard area” as set forth in section 1 of chapter 121A, and that the certified project satisfies the employment projections specified in the original project proposal. The commissioner of revenue shall notify the economic assistance coordinating council, of any application that is not certified.

The commissioner shall, not less than once every 2 years, review all projects certified by the economic assistance coordinating council on or after January 1, 2000 if the taxpayer participating in a certified project files an application for the tax credit allowed under this section.

Based upon the information provided in the application, the commissioner of revenue shall make a determination on whether the certified project is in compliance with the definition of certified project set forth in this section and whether the project has a reasonable chance of increasing employment opportunities for residents of the certified project as advanced in the initial proposal certified by the EACC. If the commissioner of revenue determines that the certified project is no longer in compliance, then he shall notify the economic assistance coordinating council of the determination, and certification of the project shall be revoked by the economic assistance coordinating council. If the project is considered decertified for reasons of fraud or material misrepresentation, as determined by the commissioner of revenue, the commissioner shall have a cause of action against the controlling business of the project for the value of any economic benefits received, including, but not limited to, the amount of the tax credit allowed under this section. Nothing in this section shall be deemed to limit the authority of the commissioner to make adjustments to a corporation’s liability upon audit.

(b) The credit allowed by this section shall be subject to the provision of section thirty-two C.

(c) In the case of a corporation that is subject to a minimum excise under any provision of this chapter, the amount of the credit allowed by this section shall not reduce the excise to an amount less than such minimum excise.

(d) Any corporation entitled to a credit under this section for any taxable year may carry over and apply to its excise for any one or more of the next succeeding ten taxable years, the portion, as reduced from year to year, of those credits which were not allowed by paragraph (c) or which exceed the excise for the taxable year; provided, however, that in no event shall the corporation apply the credit to its excise for any taxable year beginning more than five years after the certified project or economic opportunity area ceases to qualify as such under the provisions of chapter twenty-three A.

(e) In the case of corporations filing a combined return of income under section thirty-two B, a credit generated by an individual member corporation under the provisions of this section shall first be applied against the separately determined excise attributable to that member, subject to the limitations of paragraph (c). A member corporation with an excess credit may apply its excess credit against the excise of another group member, to the extent that such other member corporation can use additional credits under the limitation of said paragraph (c). Unused, unexpired credits generated by member corporations shall be carried over from year to year by the individual corporation that generated the credit. Nothing in this section shall alter the provisions of paragraph (h) of section thirty-one A.

(f) For purposes of this section, the commissioner of revenue may aggregate the activities of all corporations that are members of a controlled group of corporations and, in addition, may aggregate the activities of all entities, whether or not incorporated, under common control as defined in subsection (f) of section forty-one of the Code.

(g) The commissioner of revenue shall promulgate such rules and regulations as are necessary to implement the provisions of this section. Such rules and regulations may provide the adjustment of intercompany prices and elimination of intercompany transactions to ensure that all amounts upon which the credit is based reasonably reflect fair market value. In addition, such rules and regulations shall include provisions to prevent the generation of multiple credits with respect to the same property.

Last modified: March 26, 2006