General Laws of Massachusetts - Chapter 63 Taxation of Corporations - Section 38N Economic development incentive program; tax credit for certified projects

Section 38N. (a) A corporation subject to tax under this chapter that participates in a certified project, as defined in sections 3A and 3F of chapter 23A, may take a credit against the excise imposed by this chapter to the extent authorized by the economic assistance coordinating council established by section 3B of said chapter 23A, in an amount not to exceed 50 per cent of such liability in a taxable year; provided, however, that the 50 per cent limitation shall not apply if the credit is refundable under subsection (b): (i) for certified expansion projects and certified enhanced expansion projects, as defined in said sections 3A and 3F of said chapter 23A, an amount up to 10 per cent; and (ii) for certified manufacturing retention projects, as defined in said sections 3A and 3F of said chapter 23A, an amount up to 40 per cent of the cost of any property that would qualify for the credit allowed by section 31A if the property were purchased by a manufacturing corporation or a business corporation engaged primarily in research and development and is used exclusively in a certified project, as defined in said sections 3A and 3F of said chapter 23A. A lessee may be eligible for a credit under this subsection for real property leased under an operating lease.

The total amount of credits that may be authorized by the economic assistance coordinating council in a calendar year under subsection (g) of section 6 of chapter 62 and this section shall not exceed an annual cap equal to $25,000,000 minus the credits granted and carryforwards of credits from prior years under subsection (5) of section 38BB of this chapter and paragraph (5) of subsection (q) of section 6 of chapter 62 and shall include: (1) refundable credits granted during the year under said subsection (g) of said section 6 of said chapter 62 or this section; (2) nonrefundable credits granted during the year under said subsection (g) of said section 6 of said chapter 62 or this section, to the extent that such nonrefundable credits are estimated by the commissioner to offset tax liabilities during the year; and (3) carryforwards of credits from prior years under said subsection (g) of said section 6 of said chapter 62 or this section, to the extent that such credit carryforwards are estimated by the commissioner to offset tax liabilities during the year. Of these allowable credits, the economic assistance coordinating council may award not more than $5,000,000 in a calendar year to certified enhanced expansion projects, as defined in sections 3A and 3F of chapter 23A, and not more than $5,000,000 for certified manufacturing retention projects, as defined in said sections 3A and 3F of said chapter 23A. Any portion of the annual cap not awarded by the economic assistance coordinating council in a calendar year shall not be applied to awards in a subsequent year. The economic assistance coordinating council shall provide the commissioner with any documentation that the commissioner deems necessary to confirm compliance with the annual cap and the commissioner shall provide a report confirming compliance with the annual cap to the secretary of administration and finance and the secretary of housing and economic development.

The credit allowed under this section may be taken by an eligible corporation; provided, however, that the credit allowed by section 31A or section 31H shall not be 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 31A or ceases to be used exclusively in a certified project before the end of the certified project’s certification period, or if a certified project’s certification is revoked, the recapture provisions of subsection (e) of section 31A shall apply. If such property is disposed of after the certified project’s certification period but before the end of such property’s useful life, the recapture provisions of subsection (e) of section 31A shall apply. The expiration of a certified project’s certification shall not require the application of the recapture provisions of subsection (e) of section 31A.

As used in this paragraph, “EACC” shall mean the economic assistance coordinating council established in section 3B of chapter 23A. A credit allowed under this section may be taken only after the taxpayer completes a report signed by an authorized representative of the corporation and files the report with the EACC within 2 years after the initial project certification by the EACC and annually thereafter. The report shall contain pertinent employment data needed to determine whether the taxpayer has reasonably satisfied the employment projections set forth in its original project proposal granted pursuant to section 3F of said chapter 23A. Paragraph (3) of section 3F of said chapter 23A shall apply to tax benefits awarded under this section. Nothing in this section shall limit the authority of the commissioner to make adjustments to a corporation’s liability upon audit.

[Paragraph (b) applicable to tax years beginning on and after January 1, 2010. See 2009, 166, Sec. 47.]

(b) If a credit allowed to a taxpayer under clause (ii) of subsection (a) exceeds the excise otherwise due under this chapter, 100 per cent of the balance of such credit may, at the option of the taxpayer and to the extent authorized by the economic assistance coordinating council, be refundable to the taxpayer for the taxable year in which qualified property giving rise to that credit is placed in service. If such credit balance is refunded to the taxpayer, the credit carryover provisions of subsection (d) shall not apply. The amount of credit eligible to be refunded shall be determined without regard to the limitations in subsections (a) and (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.

[Paragraphs (d) and (e) applicable to tax years beginning on and after January 1, 2010. See 2009, 166, Sec. 47.]

(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 (a) or 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 (a) or 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 (a) or 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.

Section:  Previous  38G  38H  38I  38J  38K  38L  38M  38N  38O  38P  38Q  38R  38S  38T  38U  Next

Last modified: September 11, 2015