HB 2492 — jobs; incentives; credits; grants

2.  Anytax othercredits amountsfor dedicatednew toemployment; the fund by law.

3.  Gifts, grants and other donations received for that purpose.

B.  Monies credited to the fund may be deposited in the state treasury or in a bank or other depository pursuant to section 41-1504, subsection D, paragraph 5.

C.  The chief executive officer shall administer the fund.  On notice from the chief executive officer, the state treasurer shall invest and divest any monies in the fund deposited in the state treasury as provided by section 35-313, and monies earned from investment shall be credited to the fund.  Monies in the fund are exempt from the provisions of section 35-190 relating to lapsing of appropriations.

D.  The chief executive officer shall use monies in the fund exclusively for the purposes of section 41-1526.01.

END_STATUTE START_STATUTE41-1526.01.  Job creation payroll refund;

definitions A.  BeginningA.  The inowner calendarof year 2018, an Arizona basic enterprise may qualify for a grantbusiness fromthat theis joblocated creation fund not to exceed three and one‑half percent of the applicant's qualifying payroll in thethis calendarstate yearbefore inJuly which2017 theis granteligible wasfor made. income Thetax awardcredits ofunder anysection monies43‑1074 fromor the43‑1161 fundor shallan beinsurance atpremium thetax solecredit discretionunder ofsection the20‑224.03 chieffor executivenet officer,increases subjectin tofull-time theemployees requirementsresiding ofin this section,state and totalhired grantsin mayqualified notemployment exceedpositions the available balance in thethis fund.state.

B.  To bequalify eligibleunder forthis thesection, awardand ofsubject moniesto pursuantpreapproval toby thisthe section,authority, athe business shallmust filemeet aneither applicationat withleast one of the authority,following onrequirements afor formeach prescribedlocation byof the authority. business Thebefore applicationit shallclaims include:a first year tax credit for the location:

1.  The1.  Invest name,at addressleast five million dollars of capital investment and federalcreate incomeat taxleast identificationtwenty-five numbernet new qualified employment positions at a location within the exterior boundaries of a city or town that has a population of fifty thousand persons or more and that is located in a county that has a population of eight hundred thousand persons or more that pay compensation at least equal to one hundred percent of the applicant.county median wage as computed annually by the authority in an urban location.

2.  An2.  Invest explanationat least two million five hundred thousand dollars of capital investment and create at least twenty-five net new qualified employment positions that pay compensation at least equal to one hundred twenty-five percent of the business'county qualificationmedian wage as ancomputed Arizonaannually basicby enterprise.the authority in an urban location.

3.  The3.  Invest followingat baselineleast information:one million dollars of capital investment and create at least twenty-five net new qualified employment positions that pay compensation at least equal to one hundred fifty percent of the county median wage as computed annually by the authority in an urban location.

(a)  Total4.  INVEST numberAT ofLEAST allFIVE full-timeHUNDRED employeesTHOUSAND inDOLLARS thisOF stateCAPITAL INVESTMENT AND Create at theleast timetwenty-five net new qualified employment positions that pay compensation at least equal to two hundred percent of the application.county median wage as computed annually by the authority in an urban location.

(b)  Total2.  5.  Invest wagesat paidleast toone allmillion full-timedollars employeesof incapital thisinvestment stateand create at least five net new qualified employment positions in theany immediatelyother precedinga calendarrural year.location.

4.  A6.  Invest listat ofleast full-timefive employmenthundred positions,thousand thedollars estimatedof numbercapital ofinvestment employeesand tocreate beat hiredleast forfive thenet new qualified positions eachthat yearpay duringcompensation theat nextleast threeequal yearsto ofone operationhundred andtwenty-five percent of the annualcounty wagesmedian forwage eachas position,computed calculatedannually withoutby employee-relatedthe benefits.authority in a rural location.

5.  Letters7.  Invest ofat goodleast standingone fromhundred thethousand departmentdollars of revenuecapital statinginvestment and create at least five net new qualified positions that thepay applicantcompensation isat notleast delinquentequal into theone paymenthundred fifty percent of taxesthe tocounty anymedian taxingwage jurisdictionas incomputed annually by the state.authority in a rural location.

6.  AnyC.  The additionalcapital informationinvestment orand documentationthe new qualified employment positions requirements of subsection B of this section must be accomplished within twelve months after the start of the required capital investment.  No credit may be claimed until both requirements are met.  A business that meets the authorityrequirements requires.of subsection B of this section for a location is eligible to claim first year credits for three years beginning with the taxable year in which those requirements are completed.  Employees hired at the location before the beginning of the taxable year but during the twelve-month period allowed in this subsection are considered to be new employees for the taxable year in which all of those requirements are completed.  The employees that are considered to be new employees for the taxable year under this subsection shall not be included in the average number of full-time employees during the immediately preceding taxable year until the taxable year in which all of the requirements of subsection B of this section are completed.  An employee working at a temporary work site worksite in this state while the designated location is under construction is considered to be working at the designated location if all of the following occur:

C.  The1.  The applicantemployee mayis behired eligibleafter forthe astart grantof from the jobrequired creationinvestment fundat if:the designated location.

1.  The2.  The applicantemployee addsis athired leastto fiftywork qualifiedat full‑timethe jobsdesignated withinlocation thirty-six months after theit dateis ofcompleted. submitting the application.

2.  The3.  The applicantpayroll qualifiesfor asthe anemployees Arizonadestined basicfor enterprise.the designated location is segregated from other employees.

D.  After4.  The receivingemployee ais completemoved application,to the authoritydesignated shalllocation either:within thirty days after its completion.

1.  DenyD.  No themore certificationthan iften thethousand applicantnew doesjobs notfor meetall theemployers eligibilityqualify requirementsfor prescribedfirst byyear subsectioncredits Ceach ofyear. this section.

2.  OnE.  To receivingclaim a nonrefundabletax processingcredit, fee in an amount determined by the authority, issue the applicant a certification letter that states that the applicant is preapproved for participation in a job creation payroll refund.  Notwithstanding section 41‑1504, subsection C, paragraph 1, the legislature intends that the application fee for a job creation payroll refund not exceed two percent of the highest possible amount of the incentive for which a business maymust: qualify under a job creation payroll refund.

E.  On1.  Obtain satisfactionpreapproval offrom the eligibilityauthority requirementsat undera subsectiontime, Con ofa thisform section,and in a manner prescribed by the applicantauthority.  Preapproval shall filecover aall requestfirst foryear postapprovalcredits thatintended includesto adequatebe documentation,claimed infor the form,designated mannerlocation and substanceall determinedsecond byand thethird authority,year tocredits validateassociated thewith satisfactionthose offirst theyear minimumcredits. requirements.

F.  A2.  Certify businessto thatthe receivesdepartment postapproval under subsection E of thisrevenue sectionor maythe claimdepartment an award of moniesinsurance, foras tenapplicable, calendaron yearsor startingbefore with the calendardue yeardate in which postapproval was issued under subsection E of thisthe section. tax Thereturn, businessincluding isany ineligibleextensions for grantsthe in any year infor which the businesscredit failsis toclaimed, maintainin minimuma eligibilityform requirements,prescribed butby remainsthe eligibledepartment, forincluding grantselectronic inmedia, futureinformation years on satisfaction that minimumthe requirementsdepartment havemay beenrequire, reestablishedincluding by the business. ownership Anyinterests period of twoco‑owners consecutive years of ineligibilitythe automaticallybusiness disqualifiesif the business fromis grantsa underpartnership, thelimited existingliability preapprovalcompany certification,or butan doesS notcorporation, preventand the businessfollowing frominformation reapplying then or thereafter for aeach jobemployee creationin payrollthe refunddesignated grant.location:

G.  Not(a)  The earlierdate than January 2 or later than February 15 of theinitial yearemployment. immediately after the end of the calendar year for which the award of monies is claimed, the business must report and certify to the authority the following information, and provide supporting documentation, on a form and in a manner approved by the authority, and as specified in subsection I of this section:

1.  The(b)  The totalnumber payrollof andhours propertyworked induring thisthe state.year.

2.  The(c)  Whether percentagethe ofposition productwas soldfull‑time. out of state.

3.  The(d)  The business'employee's calculationannual ofcompensation. the grant under subsection G of this section and any information or documentation requested by the authority to substantiate the amounts used in the calculation.

4.  Any(e)  The informationtotal orcost documentationof requestedhealth byinsurance the authority to verify that each employment position for which the grantemployee willand be claimed meets the definitioncost ofpaid aby qualifiedthe full‑timeemployer. job.

5.  Any(f)  Other information orrequired documentation requested by the authoritydepartment. to verify that the employer continues to qualify as an Arizona basic enterprise.

6.  A3.  Report statementand thatcertify to the businessauthority isthe notfollowing claiminginformation, aand creditprovide undersupporting sectiondocumentation, 43-1074,on 43-1083.03,a 43-1161form orand 43-1164.04in fora anymanner ofapproved the periods covered by the moniesauthority, being refunded and isas notspecified claimingin anysubsection employment‑basedF incomeof taxthis creditsection, allowedfor undereach titleyear 43in forwhich the sametaxpayer employeesearned whoseand wagesclaimed areor includedused incredits theor computationis ofcarrying theforward moniesamounts beingfrom refundedpreviously underearned thisand section.claimed credits:

H.  The(a)  The awardbusiness ofname moniesand inmailing eachaddress ofand theany tenother calendarcontact yearsinformation shallrequested beby calculatedthe asauthority. follows:

1.  The(b)  The netphysical increaseaddress inof qualifiedthe full-timebusiness jobslocation shallor belocations and the lessernumber of:of employees qualified for the credit at each location.

(a)  The(c)  The totalaverage numberhourly ofwage filledand qualifiedthe full-timetotal jobsamount inof thiscompensation statepaid atto theemployees endqualified offor the calendarcredit year.and for all employees.

(b)  The(d)  The total number of allqualified filledemployment qualifiedpositions full-timeand jobsthe inamount thisof stateincome attax theor endpremium oftax thecredits calendarqualified yearfor minusin the basetaxable employment.year.

(c)  The(e)  The maximumestimated numberamount of qualifiedtax full-timecredits jobsto inbe thisused statein at the endtaxable of the calendar year minusto theoffset basetax employmentliability. certified by the authority during the precertification process set forth in subsection D of this section.

2.  If(f)  The theestimated businessamount remains eligible based on the calculation in paragraph 1 of thistax subsectioncredits andto thebe otheravailable eligibilityfor requirementscarryforward in subsection C of this section, the granttaxable for the calendar year shall be three and one-halfthe percentyear ofin which the lessercredits of:expire.

(a)  The(g)  The wagesnumber paidof duringjobs and the calendaramount yearof tocredits employeesearned inand qualifiedclaimed full-timeon jobsthe thatprior qualifiedyear's astax areturn. net increase under paragraph 1 of this subsection.

(b)  Wages(h)  The paidamount toof allcredits full-timeused employeesto inoffset thistax stateliabilities duringon the calendarprior yearyear's minustax thereturn. base wages.

(c)  Wages(i)  The paidamount to the maximum number of qualifiedcredits full-timeavailable employeesfor incarryforward thisas statereported aton the endprior ofyear's thetax calendarreturn yearand minus the baseyear employment certified by the authoritycredits duringexpire. the precertification process under subsection D of this section.

(d)  The(j)  Capital totalinvestment statemade incomeduring taxthe withholdingstaxable foryear alland employeesthe attributablepreceding totaxable thisyear. state.

I.  Documents(k)  Other filed with the authority under subsection G of this section shall contain either a sworn statement or certification, signed by an officer of the business under penalty of perjury, that the information containednecessary isfor true and correct according to the bestmanagement belief and knowledgereporting of the personincentives submitting the information after a reasonable investigation of the facts.  If the document contains information that is materially false, the business is ineligible for the award of monies under this sectionsection. and is subject to recovery of the amount of the award of monies allowed in preceding taxable years based on the false information, plus interest.

J.  On4.  For verificationany ofyear in which the informationtaxpayer fromis claiming first year credits, report and certify the businessfollowing underadditional subsectioninformation Hand ofprovide thissupporting section,documentation to the authority shall:on a form and in a manner approved by the authority, and as specified in subsection F of this section:

1.  Issue(a)  That a letter to the businessnet statingincrease in the amountnumber of anyqualified awardemployment ofpositions monies that is allowed for thewhich calendarcredit year,is includingsought theis basis for the calculation.least of:

2.  Issue(i)  The paymenttotal ofnumber the award of moniesfilled toqualified theemployment businesspositions forcreated at the amountdesignated approvedlocation underor paragraphlocations 1during of this subsection.  The award of monies shall be paid from the moniestaxable inyear. the job creation fund established by section 41-1526.

K.  The(ii)  The authoritydifference maybetween makethe siteaverage visitsnumber toof anfull‑time employer'semployees premisesin ifthis necessarystate toin furtherthe documentcurrent ortaxable clarifyyear reportedand information. the Theaverage employernumber mustof freelyfull‑time provideemployees in this state during the access.immediately preceding taxable year.

L.  The(b)  That authorityall byemployees rulefilling shalla prescribequalified anyemployment additionalposition reportingwere requirementsemployed for employersat thatleast ninety days during the first taxable year.  Employees hired in the last ninety days of the taxable year are awardedexcluded moniesfor pursuantthat taxable year and are considered to thisbe section.new employees in the following taxable year.

M.  For(c)  That none of the purposesemployees filling qualified employment positions were employed by the taxpayer during the twelve months before the current date of hire except for those relocating to this section:state.

1.  "Arizona(d)  That basicall enterprise"employees hasfor thewhom samesecond meaningand prescribedthird year credits are claimed are in sectionqualified 41-1545.employment positions for which first year credits were allowed and claimed by the taxpayer on the original first and second year tax returns.

2.  "Base(e)  That employment"all meansemployees thefor totalwhom numbercredits ofare alltaken employeesperformed withtheir qualifiedjob full-timeduties jobsprimarily in this state at the timedesignated thelocations complete application under subsection B of thisthe sectionbusiness. is filed.

3.  "BaseF.  To wages"qualify meansfor first year credits, the totalreport wagesand paidcertification toprescribed allby employeessubsection includedE, paragraphs 3 and 4 of this section must be filed with the authority by the earlier of six months after the end of the taxable year in which the calculationqualified employment positions were created or by the date the tax return is filed for basethe employment.taxable year in which the qualified employment positions were created.  To qualify for second year credits, the report and certification prescribed by subsection E, paragraph 3 of this section must be filed with the authority by the earlier of six months after the end of the taxable year or the date the tax return is filed for the taxable year in which the second year credits are allowable.  To qualify for third year credits, the report and certification prescribed by subsection E, paragraph 3 of this section must be filed with the authority by the earlier of six months after the end of the taxable year or the date the tax return is filed for the taxable year in which the third year credits are allowable.

4.  "QualifiedG.  Any full‑timeinformation job"submitted meansto anthe employmentauthority positionunder thatsubsection meetsE, theparagraph following3, requirements:subdivisions (e) through (j) of this section is exempt from title 39, chapter 1, article 2 and considered to be confidential and is not subject to disclosure except:

(a)  The1.  To jobthe consistsextent ofthat atthe leastperson oneor thousandorganization seventhat hundredprovided fiftythe hoursinformation perconsents yearto ofthe full-timedisclosure. permanent employment.

(b)  The2.  To employment provides health insurance coverage for the employeedepartment for which the employer pays at least sixty-five percent of therevenue premium or membership cost or, If the business is self-insured, the employer pays at least sixty-five percent of a predetermined fixed cost per employee for anuse insurancein programtax thatadministration. is payable whether or not the employee has filed claims.

(c)  TheH.  Documents employerfiled payswith compensationthe atauthority, leastthe equaldepartment of insurance and the department of revenue under subsection E of this section shall contain either a sworn statement or certification, signed by an officer of the company under penalty of perjury, that the information contained is true and correct according to onethe hundredbest twenty-fivebelief percentand knowledge of the medianperson wagesubmitting bythe countyinformation asafter computeda annuallyreasonable byinvestigation of the authority.facts.

(d)  TheIf employmentthe doesdocument notcontains includeinformation anythat jobis thatmaterially wasfalse, createdthe taxpayer is ineligible for the tax credits described under subsection A of this section and filledis beforesubject to recovery of the dateamount of tax credits allowed in preceding taxable years based on the employerfalse wasinformation, preapprovedplus underpenalties thisand section.interest.

5.  "QualifyingI.  The payroll"authority meansmay themake totalsite wagesvisits paidto a taxpayer's facilities if it is necessary to employeesfurther holdingdocument qualifiedor full‑timeclarify jobs.reported information.  The taxpayer must freely provide the access.

6.  "Wages"J.  The hasauthority theby samerule meaningshall asprescribe definedpreapproval inrequirements sectionand 3401additional ofreporting therequirements internalfor revenuetaxpayers code.who claim tax credits pursuant to this section.

END_STATUTEK.  On Sec. 2.  Sectionor 42-1118,before ArizonaSeptember Revised30 Statutes,of iseach amendedyear, the authority shall transmit a report to read:the governor, the president of the senate, the speaker of the house of representatives and the chairpersons of the senate finance committee and the house of representatives ways and means committee and provide a copy of the report to the secretary of state.  The report shall include the following information:

START_STATUTE42-1118.  Refunds,1.  The credits,business offsetsnames, andlocations, abatementsnumber A.  Ifof theemployees departmentand determines that any amount of tax,compensation penalty or interest has been paid into excessemployees ofqualifying thefor amountincome actually due, the department shall credit the excess amount against any tax administeredcredits pursuantas toreported this article, including any penalty, interest or other amounts owed by the taxpayer to the department.  Ifauthority. it is determined that the amount cannot be credited against a tax or installment of taxes due from the taxpayer, the department may:

1.  Refund2.  The the entire amount of tax,capital interestinvestment, andmade penalty,during in a lump sum or in not more than five annual installments, to the taxpayerpreceding fromfiscal whomyear itand wascumulatively. collected.

2.  Issue3.  The tototal theamount taxpayerof aincome credittax vouchercredits allowed for the entirepreceding amounttaxable ofyear tax,and interestthe andnumber penaltyof collected,qualified toemployment bepositions carriedfor forwardwhich andcredits appliedwere againstclaimed futurepursuant taxto liabilitiessections until43‑1074 exhausted.and 43‑1161.

3.  RefundL.  For part, and issue a credit voucher for the balance,purposes of the tax, interest and penalties as provided in paragraphs 1 and 2 of this subsection.section:

B.  If1.  "Capital theinvestment" totalmeans amountan withheldexpenditure fromto incomeacquire, underlease sectionor 43‑401improve exceedsproperty thethat amountis ofused the tax on the employee's entire taxable income as computed under title 43, the department shall refund the amount of the excess deducted without requiring a filing of a refund claim as provided in thisoperating section.  The failure of the department to make the refund does not limit the right of the taxpayer to file a claimbusiness, forincluding: a refund pursuant to this section if the claim is not barred under section 42‑1106.  The department shall not refund amounts less than one dollar unless specifically requested by the taxpayer at the time the return or claim for refund is filed.

C.  Any(a)  Land, overpaymentbuildings, thatmachinery mayand resultfixtures. from withholdings or estimates pursuant to section 43‑401, 43‑581 or 43‑582 shall not be credited or refunded unless an Arizona income tax return has been filed for the tax year for which the withholdings or estimates were made.

D.  The(b)  For departmenttaxable shallyears givebeginning a vendor who has a duty to collect use tax pursuant to chapter 5, article 4 of this title and who has not collected that tax full credit or offset for any use tax, interest and penalty paid to the department by the purchaser when issuing a determination of a deficiency pursuant to section 42‑1108.  This credit or offset shall be computed from the date of the use tax payment by the purchaser.  If the purchaser has been audited by the department for use tax for the period of the purchase, the purchaser is considered to have paid the use tax to the department.  For other purchases, the vendor may submit an affirmation by a purchaser on a form prescribed by the department that use tax was paid on the purchase.  A fully completed certificate, taken in good faith by the vendor, constitutes proof that the vendor is entitled to this credit or offset.  The department may require a purchaser who has submitted the certificate to establish the accuracy and completenessafter ofJune the30, information2011, containedequipment. in the certificate.  If the purchaser cannot establish the accuracy and completeness of the information, the purchaser is liable for a penalty equal to the amount of tax and interest that would have been paid by the seller and for the additional penalties pursuant to section 42‑1125.  Payment of the penalty relieves the purchaser of any responsibility for paying the use tax.  The department may require this proof and may assess the purchaser within the later of the period of limitations set forth in section 42‑1104 or one year from the date the notice of proposed deficiency is issued to the vendor if the purchaser does not establish the accuracy of the information contained in the certificate.

E.  Each2.  "Designated claimlocation" formeans refund shall be filed with the departmentlocation inat writingwhich and shall identify the claimantrequired bycapital name,investment addressis andmade taxunder identificationsubsection number.  EachB claim shall provide the amount of refundthis requested,section. the specific tax period involved and the specific grounds on which the claim is founded.  Refunds are subject to setoff for debts pursuant to section 42‑1122.

F.  A3.  "Location" motormeans vehicle manufacturer that repurchases a vehiclesingle pursuantparcel to section 44‑1263 or forcontiguous reasonsparcels of consumerowned satisfactionor mayleased applyland forin a refund of the taxes paid under chapter 5 of this titlestate, if that manufacturer has refunded the amountstructures ofand taxpersonal toproperty thecontained consumer. on A refund is allowed under this subsection only if the manufacturerland providesor satisfactoryany proofpart to the department that tax amounts attributed to the sale of the vehiclestructures wereoccupied collectedby from the consumerowner.  andParcels that theare manufacturerseparated refundedonly anby amounta ofpublic taxthoroughfare toor theright-of-way consumer. are Anyconsidered refundto providedbe undercontiguous thisbut subsectionparcels is in lieu of any refund on the vehicle that theare dealerin maylocations otherwiserespectively bedescribed entitledby tosubsection receive. B, Aparagraphs manufacturer1 mustand apply2  for5 aof refund under this subsectionsection withinare fournot yearsconsidered afterto repurchasingbe thecontiguous. vehicle.  For the purposes of this subsection:

1.  "Consumer"4.  "Qualified hasemployment theposition" samemeans meaningemployment prescribedthat inmeets sectionthe 44‑1261.following requirements:

2.  "Motor(a)  The vehicleposition manufacturer"consists means a corporation engaged in the business of producingat passengerleast cars,one trucksthousand andseven multipurposehundred passengerfifty vehicleshours asper describedyear in 49 Code of Federalfull-time Regulationspermanent sectionemployment. 571.3.

3.  "Satisfactory(b)  The proof"job includesduties copiesare ofperformed checksprimarily andat athe purchaselocation or leaselocations agreementof that lists the vehiclebusiness identificationin numberthis andstate. that itemizes the amount that was collected as tax from the consumer.

g.  A(c)  The taxpayeremployment whoprovides hashealth aninsurance incomecoverage tax credit for increased research activities under section 43-1074.01 or 43-1168 and who meets prescribed ENHANCEMENT PROJECT AND employment thresholds may convert a portion of the unusedemployee balancefor ofwhich the taxemployer creditpays eachat year,least insixty-five anper amountcent notpercent toof exceed two million five hundred thousand dollars, to offset the transactionpremium privilege tax for expenditures related to ENHANCEMENT projects in this state or intomembership reimbursementscost.  If forthe infrastructurebusiness improvementsis andself-insured, other capital expenditures associated with enhancement projects in this state.  The taxpayer must submit a claim for refund to the departmentemployer aspays providedat byleast thissixty-five section,per includingcent apercent certificate of conversiona issuedpredetermined byfixed thecost Arizonaper commerceemployee authorityfor toan theinsurance taxpayerprogram pursuantthat tois sectionpayable 41‑1507.02.  Onwhether confirmingor thenot validity of the claim,employee thehas departmentfiled shallclaims. pay the entire amount as a lump sum.

G.  H.  The(d)  The departmentemployer shallpays notcompensation imprintat theleast fullequal socialto securitythe numbermedian orwage otherby taxpayercounty identifieras usedcomputed pursuantannually toby sectionthe 42‑1105authority onwage anythreshold taxpayeras refunddescribed check,in vouchersubsection orB otherof credit documentation issued to the taxpayer under this section.

H.  I.  If5.  "Rural anylocation" amountmeans hasa beenlocation erroneouslythat determinedis towithin bethe dueboundaries fromof anytribal personlands butor nota yetcity collected,or thetown departmentwith shalla cancelpopulation theof amountless than fifty thousand persons or amountsa oncounty itswith records.a population of less than eight hundred thousand persons.

I.  J.  If,6.  "Urban withlocation" ormeans after the filing of a protestlocation orthat anis appealwithin with the department,exterior theboundaries state board of tax appeals or the court, a taxpayercity pays the tax protested or appealedtown beforethat thehas department,a boardpopulation orof courtfifty actsthousand uponpersons on the protest or themore appeal,and suchthat bodyis shalllocated treatin thea protestcounty orthat thehas appeal as a claimpopulation for refund or an appeal from the denial of aeight claimhundred forthousand refundpersons filedor undermore. this section.

22.  Forty-five22.  All percentor part of the gross proceeds of sales or gross income derived from the sale of supplies used directly in manufacturing, processing or fabricating operations or in a clean room environment that is not otherwise deducted under this section.  Thissection.  For sales occurring in 2018, one-third of the gross proceeds or gross income is deductible under this paragraph.  For sales occurring in 2019, two-thirds of the gross proceeds or gross income is deductible.  In and thereafter, the full amount of the gross proceeds of sales or gross income derived from the sales is deductible.  This paragraph expires on January 1 following the calendar year in which the aggregate amount deducted by all taxpayers under this paragraph in that calendar year exceeds six million dollars, as determined and announced by public notice by the director.  For the purposes of this paragraph, "supplies" means tangible personal property, other than machinery or equipment, that meets one of the following conditions:

22.  Forty-five22.  All percentor part of the purchase price of supplies used directly in manufacturing, processing or fabricating operations or in a clean room environment that is not otherwise deductedexempt under this section. section.  For Thispurchases occurring in 2018, one-third of the purchase price is exempt under this paragraph.  For purchases occurring in 2019, two-thirds of the purchase price is exempt.  In and thereafter, the full amount of the purchase price is exempt.  This paragraph expires according to the terms prescribed by section 42-5061, subsection b, paragraph 22.  For the purposes of this paragraph, "supplies" means tangible personal property, other than machinery or equipment, that meets one of the following conditions:

24.  Forty-five24.  All percentor part of the purchase price of supplies used directly in manufacturing, processing or fabricating operations or in a clean room environment that is not otherwise deducted under this section.  Thissection.  For sales occurring in 2018, one-third of the purchase price is deductible under this paragraph.  For sales occurring in 2019, two-thirds of the purchase price is deductible.  In 2020 and thereafter, the full amount of the purchase price is deductible.  This paragraph expires according to the terms prescribed by section 42-5061, subsection b, paragraph 22.  For the purposes of this paragraph, "supplies" means tangible personal property, other than machinery or equipment, that meets one of the following conditions:

3.  For personal property that is initially classified during or after tax year 2012 as class one, paragraph 8, 9, 10 or 13 pursuant to section 42‑12001, and personal property that is initially classified during or after tax year 2012 as class two (P) pursuant to section 42‑12002 and PERSONAL PROPERTY that is used in a manufacturing application and THAT IS ACQUIRED DURING OR AFTER TAX YEAR 2017 AND INITIALLY CLASSIFIED DURING OR AFTER TAX YEAR 2018 AS CLASS SIX PURSUANT TO SECTION 42-12006:

END_STATUTE Sec. 7.  Section 43-409,43-1074.01, Arizona Revised Statutes, as amended by Laws 2014, chapter 168, section 6, is amended to read:

START_STATUTE43-409.  Job creation withholdings clearing account A.  The job creation withholdings clearing account is established consisting of the sum of twenty-six million five hundred thousand dollars of withholding tax revenues in fiscal year 2015‑2016, and twenty‑one million five hundred thousand dollars for each fiscal year after in fiscal years 2015‑2016 and 2016-2017 and twenty-four million five hundred thousand dollars for each fiscal year thereafter.

B.  On the twentieth day of each month the state treasurer shall credit the following amounts from the clearing account:

1.  To the Arizona commerce authority fund established by section 41‑1506, one-twelfth of the annual sum of ten million dollars in each fiscal year.

2.  To the Arizona competes fund established by section 41‑1545.01, one‑twelfth of the annual sum of sixteen million five hundred thousand dollars in fiscal year 2015‑2016 and eleven million five hundred thousand dollars for each fiscal year after 2015‑2016.

3.  To the job creation fund established by section 41-1526, three million dollars in each fiscal year.

END_STATUTE Sec. 8.  Section 43-1074.01, Arizona Revised Statutes, as amended by Laws 2014, chapter 168, section 6, is amended to read:

B.  Except as provided by subsection subsections C and D of this section, if the allowable credit under this section exceeds the taxes otherwise due under this title on the claimant's income, or if there are no taxes due under this title, the amount of the credit not used to offset taxes may be carried forward to the next fifteen consecutive taxable years.  The amount of credit carryforward from taxable years beginning from and after December 31, 2000 through December 31, 2002 that may be used in any taxable year may not exceed the taxpayer's tax liability under this title or five hundred thousand dollars, whichever is less, minus the credit under this section for the current taxable year's qualified research expenses.  The amount of credit carryforward from taxable years beginning from and after December 31, 2002 that may be used in any taxable year may not exceed the taxpayer's tax liability under this title minus the credit under this section for the current taxable year's qualified research expenses.  A taxpayer who carries forward any amount of credit under this subsection may not thereafter claim a refund of any amount of the credit under subsection C of this section.

D.  For taxable years beginning from and after December 31, 2017,2017 through december 31, 2025, if a taxpayer claims a credit under this section and if the allowable credit under this section exceeds the taxes otherwise due under this title, or if there are no taxes due under this title, in lieu of carrying the excess amount of credit forward to subsequent taxable years under subsection B of this section, the taxpayer may elect to convertreinvest a portion of the unused balance of the credit to offset the transaction privilege tax burden with respect to ENHANCEMENT PROJECTS in this state or into reimbursements for infrastructure improvements and other capital expenditures associated with enhancement projects in this state.  Thestate that occurred during that year.  The amount of the taxunused credit that may be convertedreinvested under this subsection is fiftytwo percentmillion offive thehundred amountthousand requesteddollars.  The fortaxpayer conversionagrees onto thewaive date of applying for the conversion.  Thebalance taxpayer waives an equal amount of thethat year's unused tax credits received on approvalapproval.  To of the conversion.  To be eligible for the conversionreinvestment of unused tax credits under this subsection, the taxpayer must EMPLOY at least two thousand employees in this state and apply to the Arizona commerce authority as prescribed by section 41-1507.02.

END_STATUTE Sec. 9.  SectionSec. 8.  Section 43-1168, Arizona Revised Statutes, as amended by Laws 2014, chapter 168, section 10, is amended to read:

(d)  For taxable years beginning from and after December 31, 2011, an additional credit amount is allowed if the taxpayer made basic research payments during the taxable year to a university under the jurisdiction of the Arizona board of regents. regents. The additional credit amount is equal to ten per cent percent of the excess, if any, of the basic research payments over the qualified organization base period amount for the taxable year.  The department shall not allow credit amounts under this subdivision and section 43‑1074.01, subsection A, paragraph 1, subdivision (c) that exceed, in the aggregate, a combined total of ten million dollars in any calendar year.  Subject to that limit, on application by the taxpayer, the department shall certify credit amounts under this subdivision and section 43‑1074.01, subsection A, paragraph 1, subdivision (c) based on priority placement established by the date that the taxpayer filed the application.  For taxable years beginning from and after December 31, 2014, any basic research payments used to determine the additional credit under this subdivision must first receive certification from the Arizona commerce authority pursuant to section 41‑1507.01.  The additional credit amount under this subdivision shall not exceed the amount allowed based on actual basic research payments or the department's certification, whichever is less.  If an application, if certified in full, would exceed the ten million dollar limit, the department shall certify only an amount within that limit.  After the limit is attained, the department shall deny any subsequent applications regardless of whether other certified amounts are not actually claimed as a credit or other taxpayers fail to qualify to actually claim certified amounts.  Notwithstanding subsections B and D of this section, any amount of the additional credit under this subdivision that exceeds the taxes otherwise due under this title is not refundable, but may be carried forward to the next five consecutive taxable years.  For the purposes of this subdivision, "basic research payments" and "qualified organization base period amount" have the same meanings prescribed by section 41(e) of the internal revenue code.

 The additional credit amount is equal to ten per cent percent of the excess, if any, of the basic research payments over the qualified organization base period amount for the taxable year.  The department shall not allow credit amounts under this subdivision and section 43‑1074.01, subsection A, paragraph 1, subdivision (c) that exceed, in the aggregate, a combined total of ten million dollars in any calendar year.  Subject to that limit, on application by the taxpayer, the department shall certify credit amounts under this subdivision and section 43‑1074.01, subsection A, paragraph 1, subdivision (c) based on priority placement established by the date that the taxpayer filed the application.  For taxable years beginning from and after December 31, 2014, any basic research payments used to determine the additional credit under this subdivision must first receive certification from the Arizona commerce authority pursuant to section 41‑1507.01.  The additional credit amount under this subdivision shall not exceed the amount allowed based on actual basic research payments or the department's certification, whichever is less.  If an application, if certified in full, would exceed the ten million dollar limit, the department shall certify only an amount within that limit.  After the limit is attained, the department shall deny any subsequent applications regardless of whether other certified amounts are not actually claimed as a credit or other taxpayers fail to qualify to actually claim certified amounts.  Notwithstanding subsections B and D of this section, any amount of the additional credit under this subdivision that exceeds the taxes otherwise due under this title is not refundable, but may be carried forward to the next five consecutive taxable years.  For the purposes of this subdivision, "basic research payments" and "qualified organization base period amount" have the same meanings prescribed by section 41(e) of the internal revenue code.

E.  For taxable years beginning from and after December 31, 2017,2017 through december 31, 2025, if a taxpayer claims a credit under this section and if the allowable credit under this section exceeds the taxes otherwise due under this title, or if there are no taxes due under this title, in lieu of carrying the excess amount of credit forward to subsequent taxable years under subsection B of this section, the taxpayer may elect to convertreinvest a portion of the unused balance of the credit tofor offsetcapital theexpenditures transactionassociated privilege tax burden with respectenhancement toprojects ENHANCEMENT PROJECTS in this state orthat intooccurred reimbursementsduring forthat infrastructureyear.  improvementsThe and other capital expenditures associated with enhancement projects in this state.  The amount of the taxunused credit that may be convertedreinvested under this subsection is fiftytwo percentmillion offive thehundred amountthousand requesteddollars.  The fortaxpayer conversionagrees onto thewaive date of applying for the conversion.  Thebalance taxpayer waives an equal amount of thethat year's unused tax credits received on approvalapproval.  To of the conversion.  To be eligible for the conversionreinvestment of unused tax credits under this subsection, the taxpayer must EMPLOY at least two thousand employees in this state and apply to the Arizona commerce authority as prescribed by section 41-1507.02.

END_STATUTE Sec. 10.  EffectiveSec. 9.  Delayed daterepeal ExceptSection as41-1507.02, providedArizona inRevised sectionStatutes, 11as ofadded by this act, this act is effectiverepealed from and after December 31, 2017.2025.

Sec. 10.  Effective date Except as provided in section 11 of this act, this act is effective from and after December 31, 2017.