HB 372 — AN ACT relating to tax incentives.

and (d) The aggregate amount of the exemption claimed from all qualifying data centers and the number of qualifying data centers benefitting from the exemption, after three (3) or more qualified data centers have claimed the exemption for at least two (2) years.

(6) Notwithstanding KRS 139.720, every qualifying data center using this exemption shall keep the records, receipts, invoices, and other pertinent papers in such form and timeframe as the department may require.

(7) The report shall not include, and the department shall not publish or disclose, any information that is not aggregated or if a report or publication could be used to identify a specific person.

Page 3 of 19 XXXX Engrossed UNOFFICIAL COPY 21 RS HB 372/EN (8) As used in this section:

The cost of contract bonds and of insurance of all kinds that may be required or necessary during the course of acquisition, construction, Page 2 of 10 XXXX Jacketed UNOFFICIAL COPY 21 RS BR 1158 installation, equipping, and rehabilitation of a project which is not paid by the contractor or contractors or otherwise provided;

(d) "Data center" means a person that has a facility comprised of one (1) or Page 4 of 19 XXXX Engrossed UNOFFICIAL COPY 21 RS HB 372/EN more buildings in Kentucky that is used to house and continuously operate computer servers and associated data center equipment for the transmission and storage of data where the facility has the following characteristics:

and Page 3 of 10 XXXX Jacketed UNOFFICIAL COPY 21 RS BR 1158 b.

and Page 5 of 19 XXXX Engrossed UNOFFICIAL COPY 21 RS HB 372/EN x.

Page 4 of 10 XXXX Jacketed UNOFFICIAL COPY 21 RS BR 1158 vi.

and Page 6 of 19 XXXX Engrossed UNOFFICIAL COPY 21 RS HB 372/EN ix.

(f) "Full-time employee" means a person employed for a minimum of thirty- Page 5 of 10 XXXX Jacketed UNOFFICIAL COPY 21 RS BR 1158 five (35) hours per week and subject to the tax imposed by KRS 141.020;

of this subdivision is less than one hundred fifty percent (150%) of the federal minimum wage, then the base hourly wage shall be one hundred fifty percent (150%) of the federal Page 7 of 19 XXXX Engrossed UNOFFICIAL COPY 21 RS HB 372/EN minimum wage.

SectionSECTION 2.

A NEW SECTION OF KRS CHAPTER 141 IS CREATED TO READ AS FOLLOWS:

(1) As used in this section:

(a) "Affiliate" means:

1.

Members of a family, including brothers and sisters of the whole or half blood, spouse, ancestors, and any lineal descendant of an individual;

2.

An individual and a corporation, of which more than twenty percent (20%) in value of the outstanding stock is owned, directly or indirectly, by or for that individual;

or 3.

An individual and a limited liability company or a partnership, of which more than twenty percent (20%) of the capital interest or profits are owned or controlled, directly or indirectly, by or for that individual;

and (b) "Property tax" means the total ad valorem tax paid to the Commonwealth, a city, a county, a consolidated local government, an urban county government, or any other taxing district;

(c) "Remote worker" means any individual who:

1.

Works from his or her principal place of residence in Kentucky for a business entity that is only doing business in this state through the presence of employees located in this state;

2.

Earns gross income from a business entity that is not an affiliate with the individual;

3.

Is employed by the business entity as a full-time employee, working a Page 8 of 19 XXXX Engrossed UNOFFICIAL COPY 21 RS HB 372/EN minimum of thirty-five (35) hours per week;

and 4.

a.

Has moved into this state on or after January 1, 2021;

or b.

On or after January 1, 2021:

i.

Was a student attending a college or university in Kentucky and remains in this state for employment;

or ii.

Was a member of the Armed Forces, receives a military discharge, and returns to or remains in this state for employment.

(2) For taxable years beginning on or after January 1, 2021, there is hereby established the remote worker tax credit as a credit against the tax imposed under KRS 141.020, with the ordering of credits under Section 4 of this Act.

(3) (a) The remote worker tax credit allowed under subsection (2) of this section:

1.

Shall be:

a.

Nonrefundable and nontransferable;

and b.

Allowed to any individual qualifying as a remote worker;

and 2.

May be composed of the two (2) calculations under paragraphs (b) and (c) of this subsection.

(b) 1.

The tax credit shall be in an amount equal to:

a.

For the first taxable year the credit is allowed for the remote worker, five thousand dollars ($5,000);

b.

For the second taxable year that the credit is allowed for the remote worker, four thousand dollars ($4,000);

c.

For the third taxable year that the credit is allowed for the remote worker, three thousand dollars ($3,000);

d.

For the fourth taxable year that the credit is allowed for the remote worker, two thousand dollars ($2,000);

e.

For the fifth taxable year that the credit is allowed for the remote Page 9 of 19 XXXX Engrossed UNOFFICIAL COPY 21 RS HB 372/EN worker, one thousand dollars ($1,000);

f.

Zero for any taxable year after the fifth taxable year that the credit is allowed for the remote worker;

2.

a.

The amounts in subparagraph 1.

of this paragraph shall be factored according to the following amounts, which are based on the population density of the county in which a remote worker's principal place of residence is located:

i.

One hundred percent (100%) if the county has a population density of less than sixty-two (62) persons per square mile;

ii.

Ninety percent (90%) if the county has a population density between sixty-two persons (62) persons per square mile and up to one hundred four (104) persons per square mile;

and iii.

Eighty percent (80%) if the county has a population density of one hundred four persons (104) or more per square mile.

b.

Notwithstanding subdivision a.

of this subparagraph, the amounts in subparagraph 1.

of this paragraph shall be factored by one hundred percent (100%) if the remote worker's principal place of residence is located in a Kentucky opportunity zone.

c.

The population density for a county shall be calculated by dividing the number of residents in the county, based on the most recent federal decennial census, by the square miles in the county.

(c) 1.

In addition to the amount of tax credit provided in paragraph (b) of this subsection, the remote worker shall also receive an additional amount of tax credit if the remote worker is a first-time home buyer in Kentucky during the five (5) year tax credit period.

Page 10 of 19 XXXX Engrossed UNOFFICIAL COPY 21 RS HB 372/EN 2.

If the remote worker purchases his or her principal residence during the five (5) years that the tax credit is allowed under paragraph (b) of this subsection, the total tax credit under this section shall be in an amount equal to the amount of tax credit from paragraph (b) of this subsection allowed for that taxable year plus the amount of property tax imposed and timely paid by the taxpayer related to the real property owned and occupied by the taxpayer as the residence where the taxpayer is remotely working during the first full year of ownership.

(d) All individuals qualifying for this tax credit shall claim the credit for the first taxable year prior to January 1, 2026, and shall not be allowed a credit for more than five (5) successive taxable years.

(e) Any portion of the tax credit that is not fully utilized in the taxable year during which it is earned shall not be carried back or carried forward to any other taxable year.

(4) (a) In order for the General Assembly to evaluate this tax credit, the department shall provide the following information on a cumulative basis for each taxable year to provide a historical impact of the tax credit to the Commonwealth:

1.

The name and location, by county, of the taxpayer claiming the remote worker tax credit;

2.

Based on the most recent United States federal decennial census data, a statement as to whether the county where the remote worker's principal place of residence is located has a population density of:

a.

Less than sixty-two (62) persons per square mile;

b.

Between sixty-two persons (62) persons per square mile and up to one hundred four (104) persons per square mile;

or Page 11 of 19 XXXX Engrossed UNOFFICIAL COPY 21 RS HB 372/EN c.

One hundred four persons (104) or more per square mile;

and 3.

A statement as to whether the remote worker is located in a federal opportunity zone as designated in 26 U.S.C.

sec.

1400Z-1 and 1400Z- 2;

4.

The amount of gross income reported by the taxpayer;

5.

The amount of tax credit allowed for each taxable year;

6.

The total amount of all tax credits claimed by all taxpayers for the fiscal year;

and 7.

Based on ranges of adjusted gross income of no larger than five thousand dollars ($5,000) for the taxable year, the total amount of tax credits claimed and the number of returns claiming a tax credit for each adjusted gross income range.

(b) The report required under paragraph (a) of this subsection shall be submitted to the Interim Joint Committee on Appropriations and Revenue by November 1, 2022, and each November 1 thereafter as long as the remote worker tax credit is claimed on a return processed by the department.

Section 3.

(1) No present or former commissioner or employee of the department, present or former member of a county board of assessment appeals, present or former property valuation administrator or employee, present or former secretary or employee of the Finance and Administration Cabinet, former secretary or employee of the Revenue Cabinet, or any other person, shall intentionally and without authorization inspect or divulge any information acquired by him of the affairs of any person, or information Page 6 of 10 XXXX Jacketed UNOFFICIAL COPY 21 RS BR 1158 regarding the tax schedules, returns, or reports required to be filed with the department or other proper officer, or any information produced by a hearing or investigation, insofar as the information may have to do with the affairs of the person's business.

Page 12 of 19 XXXX Engrossed UNOFFICIAL COPY 21 RS HB 372/EN (2) The prohibition established by subsection (1) of this section shall not extend to:

(f) Providing to a third-party purchaser pursuant to an order entered in a foreclosure action filed in a court of competent jurisdiction, factual information related to the owner or lessee of coal, oil, gas reserves, or any Page 7 of 10 XXXX Jacketed UNOFFICIAL COPY 21 RS BR 1158 other mineral resources assessed under KRS 132.820.

Any fee imposed shall not exceed the greater of the actual cost of providing the information or Page 13 of 19 XXXX Engrossed UNOFFICIAL COPY 21 RS HB 372/EN ten dollars ($10);

Page 8 of 10 XXXX Jacketed UNOFFICIAL COPY 21 RS BR 1158 10.

andPage 14 of 19 XXXX Engrossed UNOFFICIAL COPY 21 RS HB 372/EN 13.

Section 1 of this Act for the purposes of the data center sales and use tax exemption.exemption;

and 14.

Section 2 of this Act for the purposes of the remote worker tax credit.

(6) Notwithstanding any provision of law to the contrary, beginning with mine-map submissions for the 1989 tax year, the department may make public or divulge only those portions of mine maps submitted by taxpayers to the department pursuant to KRS Chapter 132 for ad valorem tax purposes that depict the boundaries of mined- Page 9 of 10 XXXX Jacketed UNOFFICIAL COPY 21 RS BR 1158 out parcel areas.

Property boundaries contained in mine maps required under KRS Chapters 350 and 352 shall not be construed to constitute land Page 15 of 19 XXXX Engrossed UNOFFICIAL COPY 21 RS HB 372/EN surveying or boundary surveys as defined by KRS 322.010 and any administrative regulations promulgated thereto.

Section 3.4.

ThisKRS Act141.0205 takesis effectamended onto Julyread 1,as 2021.follows:

PageIf 10a taxpayer is entitled to more than one (1) of 10the XXXXtax Jacketedcredits allowed against the tax imposed by KRS 141.020, 141.040, and 141.0401, the priority of application and use of the credits shall be determined as follows:

(1) The nonrefundable business incentive credits against the tax imposed by KRS 141.020 shall be taken in the following order:

(a) The limited liability entity tax credit permitted by KRS 141.0401;

(b) The economic development credits computed under KRS 141.347, 141.381, 141.384, 141.3841, 141.400, 141.401, 141.403, 141.407, 141.415, 154.12- 207, and 154.12-2088;

(c) The qualified farming operation credit permitted by KRS 141.412;

(d) The certified rehabilitation credit permitted by KRS 171.397(1)(a);

(e) The health insurance credit permitted by KRS 141.062;

(f) The tax paid to other states credit permitted by KRS 141.070;

(g) The credit for hiring the unemployed permitted by KRS 141.065;

(h) The recycling or composting equipment credit permitted by KRS 141.390;

(i) The tax credit for cash contributions in investment funds permitted by KRS 154.20-263 in effect prior to July 15, 2002, and the credit permitted by KRS 154.20-258;

(j) The research facilities credit permitted by KRS 141.395;

(k) The employer High School Equivalency Diploma program incentive credit permitted under KRS 151B.402;

(l) The voluntary environmental remediation credit permitted by KRS 141.418;

(m) The biodiesel and renewable diesel credit permitted by KRS 141.423;

(n) The clean coal incentive credit permitted by KRS 141.428;

Page 16 of 19 XXXX Engrossed UNOFFICIAL COPY 21 RS HB 372/EN (o) The ethanol credit permitted by KRS 141.4242;

(p) The cellulosic ethanol credit permitted by KRS 141.4244;

(q) The energy efficiency credits permitted by KRS 141.436;

(r) The railroad maintenance and improvement credit permitted by KRS 141.385;

(s) The Endow Kentucky credit permitted by KRS 141.438;

(t) The New Markets Development Program credit permitted by KRS 141.434;

(u) The distilled spirits credit permitted by KRS 141.389;

(v) The angel investor credit permitted by KRS 141.396;

(w) The film industry credit permitted by KRS 141.383 for applications approved on or after April 27, 2018;

(x) The inventory credit permitted by KRS 141.408;

and (y) The renewable chemical production credit permitted by KRS 141.4231.

(2) After the application of the nonrefundable credits in subsection (1) of this section, the nonrefundable personal tax credits against the tax imposed by KRS 141.020 shall be taken in the following order:

(a) The individual credits permitted by KRS 141.020(3);

(b) The credit permitted by KRS 141.066;

(c) The tuition credit permitted by KRS 141.069;

(d) The household and dependent care credit permitted by KRS 141.067;[ and] (e) The income gap credit permitted by KRS 141.066;

and (f) The remote worker credit permitted by Section 2 of this Act.

(3) After the application of the nonrefundable credits provided for in subsection (2) of this section, the refundable credits against the tax imposed by KRS 141.020 shall be taken in the following order:

(a) The individual withholding tax credit permitted by KRS 141.350;

(b) The individual estimated tax payment credit permitted by KRS 141.305;

(c) The certified rehabilitation credit permitted by KRS 171.3961 and Page 17 of 19 XXXX Engrossed UNOFFICIAL COPY 21 RS HB 372/EN 171.397(1)(b);

and (d) The film industry tax credit permitted by KRS 141.383 for applications approved prior to April 27, 2018.

(4) The nonrefundable credit permitted by KRS 141.0401 shall be applied against the tax imposed by KRS 141.040.

(5) The following nonrefundable credits shall be applied against the sum of the tax imposed by KRS 141.040 after subtracting the credit provided for in subsection (4) of this section, and the tax imposed by KRS 141.0401 in the following order:

(a) The economic development credits computed under KRS 141.347, 141.381, 141.384, 141.3841, 141.400, 141.401, 141.403, 141.407, 141.415, 154.12- 207, and 154.12-2088;

(b) The qualified farming operation credit permitted by KRS 141.412;

(c) The certified rehabilitation credit permitted by KRS 171.397(1)(a);

(d) The health insurance credit permitted by KRS 141.062;

(e) The unemployment credit permitted by KRS 141.065;

(f) The recycling or composting equipment credit permitted by KRS 141.390;

(g) The coal conversion credit permitted by KRS 141.041;

(h) The enterprise zone credit permitted by KRS 154.45-090, for taxable periods ending prior to January 1, 2008;

(i) The tax credit for cash contributions to investment funds permitted by KRS 154.20-263 in effect prior to July 15, 2002, and the credit permitted by KRS 154.20-258;

(j) The research facilities credit permitted by KRS 141.395;

(k) The employer High School Equivalency Diploma program incentive credit permitted by KRS 151B.402;

(l) The voluntary environmental remediation credit permitted by KRS 141.418;

(m) The biodiesel and renewable diesel credit permitted by KRS 141.423;

Page 18 of 19 XXXX Engrossed UNOFFICIAL COPY 21 RS HB 372/EN (n) The clean coal incentive credit permitted by KRS 141.428;

(o) The ethanol credit permitted by KRS 141.4242;

(p) The cellulosic ethanol credit permitted by KRS 141.4244;

(q) The energy efficiency credits permitted by KRS 141.436;

(r) The ENERGY STAR home or ENERGY STAR manufactured home credit permitted by KRS 141.437;

(s) The railroad maintenance and improvement credit permitted by KRS 141.385;

(t) The railroad expansion credit permitted by KRS 141.386;

(u) The Endow Kentucky credit permitted by KRS 141.438;

(v) The New Markets Development Program credit permitted by KRS 141.434;

(w) The distilled spirits credit permitted by KRS 141.389;

(x) The film industry credit permitted by KRS 141.383 for applications approved on or after April 27, 2018;

(y) The inventory credit permitted by KRS 141.408;

and (z) The renewable chemical production tax credit permitted by KRS 141.4231.

(6) After the application of the nonrefundable credits in subsection (5) of this section, the refundable credits shall be taken in the following order:

(a) The corporation estimated tax payment credit permitted by KRS 141.044;

(b) The certified rehabilitation credit permitted by KRS 171.3961 and 171.397(1)(b);

and (c) The film industry tax credit permitted by KRS 141.383 for applications approved prior to April 27, 2018.

Section 5.

Section 1 of this Act takes effect on July 1, 2021.

Page 19 of 19 XXXX Engrossed