SB 461

Under federal law, the New Markets Tax Credit Program permits federal

taxpayers to receive a credit against federal income taxes for making investments

in qualified community development entities (QCDE). Federal law defines a QCDE

as an entity with the primary mission of serving or providing investment capital for

low-income communities or low-income persons that has been certified by the

secretary of the Internal Revenue Service.

This bill authorizes the Department of Commerce (Commerce) to certify an

individual who applies to Commerce, has made an investment in a QCDE, and is

eligible to receive the federal New Markets Tax Credit to receive a credit against

state income and franchise taxes and against license fees paid by insurers. Prior to

certification, Commerce must verify that the person has made an investment in a

QCDE with the primary mission of serving or providing investment capital for

low-income communities or low-income persons in this state. Commerce must

annually verify that the person continues to hold the investment in any year the

person seeks to claim the credit.

The credit may be claimed for seven consecutive taxable years beginning with

the taxable year in which the taxpayer makes an investment in a QCDE. The

amount of the credit that a taxpayer may claim is equal to the amount of the

taxpayer's investment multiplied by the following percentages:

1. For the first three taxable years, 5 percent.

2. For the next four taxable years, 6 percent.