Current through Vol. 42, No. 1, September 16, 2024
(a)
For tax years 1981 through 1987. For tax years 1981 through 1987
the Oklahoma Investment/New Jobs Credit is allowed for Oklahoma Income Tax
purposes only on investment in qualified depreciable property which directly
results in a net increase in the number of employees engaged in manufacturing
or processing in this state.
(b)
For 1988, and later years. For 1988, and later years, the Oklahoma
Investment/New Jobs Credit may be calculated on the investment or new employees
when other qualifications are met. (See OTC Form 506).
(c)
Examples. A company engaged
in the process of cooking hamburgers for sale to the general public does not
qualify for the Investment/New Jobs Credit. The Oklahoma Supreme Court
determined, in the case McDonald's Corp. vs. Oklahoma Tax
Commission, 563 P.2d 635 (Okla. 1977), that a company engaged in retail
sales or a service organization (laundry, transportation, oil & gas
production, drilling, restaurant, repair services, etc.) does not qualify for
Oklahoma Investment/New Jobs Credit. [See: 68 O.S. §§
2357.4,
2357.5
]
(d)
"Processing"
defined. For purposes of this Section, "processing" means
the preparation of tangible personal property for market. "Processing" begins
when the form, context, or condition of the tangible personal property is
changed with the intent of eventually transforming the property into a saleable
product. "Processing" ends when the property being processed is in the form in
which it is ultimately intended to be sold at retail. A business that has the
majority of its emphasis on the retail side of business does not qualify as a
processor or a manufacturer for purposes of this credit.
(e)
Leasing of employees by
manufacturing or processing entity for purposes of the new jobs credit.
A company that engages in manufacturing or processing may still qualify for the
Oklahoma New Jobs Credit pursuant to 68 O.S. §
2357.4
even though they lease their employees through an employee leasing company. The
leased employees must still meet the requirements of 68 O.S. §
2357.4
for full-time equivalent employees and there must exist an employer-employee
relationship between the leased employees and the employer who seeks the new
jobs credit pursuant to 68 O.S. §
2357.4.
Whether the employer-employee relationship exists between the employer
manufacturing or processing entity and an employee who is leased will be
determined on a case by case basis by considering the following factors:
(1) The right of the employer to control the
details of the employees work;
(2)
The employer furnishing the tools and the workplace;
(3) The employee having taxes, worker's
compensation and unemployment insurance funds withheld and the employer being
liable for these items;
(4) The
employer's right to discharge the employee; and
(5) The permanency of the employer-employee
relationship.
(f)
Transfer of employees. The transfer of employees to or from a
leasing company cannot generate any additional credit, nor will any transfer of
employees extend the period of time in which a current credit may be
claimed.
(g)
Carryover. Any credits allowed based on assets placed into service
prior to January 1, 2000, or an increase in employment but not used may be
carried over, in order, to each of the four (4) years following the year of
qualification, and to the extent not used in those years, in order, to each of
the fifteen (15) years following the initial five-year period. Credits allowed
for assets placed into service after December 31, 1999, but not used may be
carried over, in order, to each of the four (4) years following the year of
qualification, and to the extent not used in those years, to any year following
the initial five-year period.
(h)
Limitations.
(1) No qualified
establishment, nor its contractors or subcontractors, that has received or is
receiving an incentive payment pursuant to Section 3601 et seq. of the Oklahoma
Statutes, (Oklahoma Quality Jobs Program Act), Section 3901 et seq. of the
Oklahoma Statutes, (Small Employer Quality Jobs Incentive Act) or Section 3911
et seq. of the Oklahoma Statutes (21
st Century Quality Jobs Incentive Act)
shall be eligible to receive the credit described in this Section in connection
with the activity and establishment for which incentive payments have been, or
are being received. Effective January 1, 2010, this limitation does not apply
to the investment / new jobs credit earned under 68 O.S. §
2357.4
(which requires a $40 million investment within a three (3) year time period).
Further, the entity must pay an annualized wage which equals or exceeds the
state average wage. The qualifying entity must also obtain a determination
letter from the Oklahoma Department of Commerce that the business activity of
the entity will result in a positive net benefit rate. [See: 68
O.S. §§
3607,
3909
and
3919
]
(2) Business entities that
benefit from proceeds of obligations issued by the Oklahoma Development Finance
Authority from the Economic Development Pool may not generate, accrue or
otherwise claim any investment tax credits during the period of time that
withholding taxes attributable to the payroll of said entity are being paid to
the Community Economic Development Pooled Finance Revolving Fund or in any
manner used for the payment of principal, interest or other costs associated
with any obligations issued by the Oklahoma Development Finance Authority
pursuant to the provisions Oklahoma Community Economic Development Pooled
Finance Act.
(3) Beginning January
1, 2017, except with respect to tax credits allowed from investment or job
creation occurring prior to January 1, 2017, the credits authorized by 68 O.S.
§
2357.4
shall not be allowed for investment or job creation in electric power
generation by means of wind as described by the North American Industry
Classification System No. 221119.
(4) Effective for tax years beginning on or
after January 1, 2016 and ending on or before December 31, 2018, no more than
Twenty-five Million Dollars ($25,000,000.00) of credit may be allowed as an
offset in a taxable year. The formula to be used for the percentage adjustment
shall be Twenty-five Million Dollars ($25,000,000.00) divided by the amount of
credits used to offset tax in the second preceding year. [68 O.S. §
2357.4(L)
] The Tax Commission shall determine the percentage which may be claimed as a
credit no later than September 1 of each calendar year. Any credits carried
over into or earned during the 2016, 2017, and 2018 tax years but which are not
allowed to be offset against income tax due to the application of the
Twenty-five Million Dollar ($25,000,000.00) cap may be carried over as outlined
in subsection (g) and will be available to offset income tax in subsequent tax
years.
(i)
Tax
credit moratorium.
(1) Credits based
on assets placed in service or jobs created prior to July 1, 2010 are not
affected by the tax credit moratorium and may be claimed as provided under 68
O.S. §
2357.4.
(2) No credit may be claimed for assets
placed in service or new jobs created on or after July 1, 2010 through June 30,
2012. Credits generated during this time period are deferred, and may be
claimed beginning with tax year 2012 returns, subject to the following
limitations:
(A) Credits accrued during the
period from July 1, 2010 through June 30, 2012, shall be limited to a period of
two (2) taxable years.
(B) Only
fifty percent (50%) of the total amount of the credit generated between July 1,
2010 and June 30, 2012 may be claimed each taxable year.
(C) Amended returns shall not be filed after
July 1, 2012 to claim the credits generated between July 1, 2010 and June 30,
2012 for tax years prior to tax year 2012.
(3) For example, a calendar year taxpayer
places qualifying assets of $150,000.00 in service in August 2010 which
generates $1,500.00 of credit for investment/new jobs per tax year for a five
(5) year period (tax year 2010 through 2014) for a total of $7,500.00. This
results in the taxpayer generating $3,000.00 of tax credits between July 1,
2010 and June 30, 2012. The taxpayer can initially claim $1,500.00 in tax year
2012 and $1,500.00 in tax year 2013 of credits generated during the moratorium.
Taxpayer may also claim an additional $1,500.00 of credits in both tax year
2012 and 2013. Final $1,500.00 of credits can be claimed in tax year
2014.
Amended at 11 Ok Reg 555, eff 11-10-93 (emergency);
Amended at 11 Ok Reg 3497, eff 6-26-94 ; Amended at 13 Ok Reg 3105, eff 7-11-96
; Amended at 15 Ok Reg 2811, eff 6-25-98 ; Amended at 18 Ok Reg 2810, eff
6-25-01 ; Amended at 21 Ok Reg 2571, eff 6-25-04 ; Amended at 27 Ok Reg 2281,
eff 7-11-10 ; Amended at 28 Ok Reg 18, eff 8-9-10 (emergency); Amended at 28
Ok Reg 935, eff 6-1-11 ; Amended at 30 Ok Reg 1858, eff
7-11-13
