CHAPTER 202
FORMERLY
HOUSE BILL NO. 415
AS AMENDED BY HOUSE AMENDMENT NOS. 1 AND 5
AN ACT TO AMEND CHAPTERS 11 AND 20 OF TITLE 30 AND CHAPTER 11 OF TITLE 5 OF THE DELAWARE CODE AND 64 DELAWARE LAWS CHAPTER 460 AS AMENDED BY 67 DELAWARE LAWS CHAPTER 120 AND 68 DELAWARE LAWS CHAPTER 6 RELATING TO TAX CREDITS.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:
Section 1. Amend §2010, Title 30 of the Delaware Code by striking the year "1992" as the same appears in subsections (4) and (5) thereof and substituting in lieu thereof the year "1997".
Section 2. Amend §12 of 64 Delaware Laws, Chapter 460, as amended by 67 Delaware Laws, Chapter 120, and 68 Delaware Laws, Chapter 6, by striking the year "1992" as the same appears in said section and substituting in lieu thereof the year "1997".
Section 3. Amend §2011, Title 30 of the Delaware Code by adding thereto new subsections (h), (i) and (j) to read as follows:
"(h) Any taxpayer (other than a public utility as defined in Chapter 1 of Title 26) engaged in a qualified activity that, for any taxable year ('the current year') ending after December 31, 1991 or before January 1, 1994, has an average number of employees employed by the taxpayer in full-time employment in this State during said tax year in excess of the average number of employees employed by the taxpayer during the period January 1, 1991 through December 31, 1991 ("the base year") shall be allowed a credit against the tax imposed for the current year by Chapter 19 or Chapter 11 by virtue of §1115 or §2024 of this title.
The amount of such credit for such current year shall equal $250 times the average number of employees employed by the taxpayer in full-time employment within this State during the current year minus the average number of employees employed by the taxpayer in full-time employment within this State during the base year, rounded down to the next full number, such difference to be defined as new employment'. Employees who are employed in this State by the taxpayer for a continuous period of fewer than six months shall not be considered in calculating the credit provided under this subsection. However, employees employed for a continuous period of at least six months during the base and current year which includes a period of less than six months in either the base year or the current year shall be considered in calculating the credit under this subsection. Employees of a taxpayer employed at the same facility in substantially the same capacity by a different taxpayer during all or part of the base year shall not be considered in computing employment during the current year under this subsection.
In the case of any taxpayer qualifying for credits under subsection (a) or (h) of this section or §2021 of this title who provides health care benefits as defined in §2010(15) of this title during any tax year ending after December 31, 1991 or before January 1, 1994, the credits provided by subsections (b)(1) or (h) (but, in the case of any taxpayer, not both) of this section or §2021 of this title shall be increased by $250.
Notwithstanding the provisions of §2011 of this title, credits provided by subsections (h) and (i) of this section may be earned and applied only in tax years beginning after December 31, 1991, and ending before January 1, 1994, subject to carryover under the provisions of §2011(f) of this title."
Section 4. Amend §2010(3)e., Title 30 of the Delaware Code by designating said paragraph e. as paragraph h. of §2010(3), and by striking the letter and punctuation "d." as they appear in said paragraph and substitute in lieu thereof the letter and punctuation "g.".
§2010(3) new paragraphs e., f., and g. to read as follows:
"e. Any activity more than 50% of whose annual gross receipts are derived from computer processing or data preparation or processing services, including data entry (but not word processing) and making data processing equipment available on an hourly or time-sharing basis;
Any activity more than 50% of whose annual gross receipts are
derived from engineering services including providing and supervising the taxpayer's engineering staff on temporary contract to other firms. The term 'engineering services' does not include businesses providing engineering personnel but not general supervision; nor does it include businesses primarily engaged in architectural or photogrammetric engineering;
Any activity more than 50% of whose annual gross receipts are derived from consumer credit reporting services, including adjustment and collection services and credit reporting services. Adjustment and
collection services are establishments primarily engaged in the collection or adjustment of claims, other than insurance. Credit reporting services are establishments primarily engaged in providing mercantile and consumer credit reporting services; or
Section 6. Amend §2010(3), Title 30 of the Delaware Code, by striking paragraph d. in its entirety and substituting in lieu thereof the following:
The administration, management, or support operations, including
marketing, of any activity described in paragraphs a. through g. of this subdivision;"
Section 7. Amend §1105, Title 5 of the Delaware Code by designating
existing §1105 as subsection (a) of said section and by adding to said section new subsections (b) and (c) to read as follows:
"(b) For taxable years beginning after December 31, 1991, and ending before January 1, 1994, there shall be allowed as a credit against the tax imposed under subsection (a) of this section the applicable amounts provided in §2011(h) or (i) (or both) of Title 30 as if the definition of 'Taxpayer' in §2010(13) and the definition of 'qualified activity' of §2010(3) of Title 30 also included, solely for purposes of the credit provided in this subsection, banks subject to tax under this section, provided the taxpayer meets the qualifications set forth in said §2011(h) or (i). Notwithstanding the provisions of this subsection, credits arising solely by virtue of §2011(a) shall not be allowed against the tax imposed by this chapter.
(c)(1) The amount of credit allowable under subsection (b) of this section shall not exceed 50% of the amount of tax imposed upon the taxpayer by subsection (a) of this section for such taxable year; and (2) The amount of the credit determined under subsection (b) of this section for any taxable year that is not allowable for such taxable year solely as a result of the limitation contained in paragraph. (1) of this subsection shall be a credit carryover to each of the succeeding nine years in the manner described in §2011(f) of Title 30."
Section 8. Amend §2010, Title 30 of the Delaware Code by adding to said section new subsections (14) and (15) to read as follows:
"(14) 'Full-time employment' means employment of one individual for at least 35 hours per week, not including absences excused by reason of vacations, illness, holidays or similar causes.
(15) 'Health care benefits' means financial protection against the medical care cost arising from disease and accidental bodily injury for which cost the employer pays at least 50% for employees employed by the employer for a continuous period of six months or more."
Section R. Amend Section 2020(1), Title 30 of the Delaware Code by adding a new subparagraph e. to read as follows:
When socio-economic data becomes available from the 1990 Census, the Director of the Delaware Development Office in conjunction with the Secretary of Finance shall evaluate all census tracts using the following criteria: percent of persons below poverty level; percent of households receiving public assistance; unemployment rate; median household income; a significant presence of vacant property within the target area; the character of the Community; and population. Based on these criteria census tracts shall be reallocated on the following basis: 10 in City of Wilmington; 10 in New Castle County outside of the City of Wilmington; 5 in Kent County; and 5 in Sussex County. The provisions of this subparagraph shall supercede subparagraph d. of this subsection upon the reallocation of the census tracts.
Upon request, the Director of the Delaware Development Office, in conjunction with the Secretary of Finance, may consider extending the geographic boundary lines of the target area where the adjacent community otherwise satisfies the above-referenced criteria."
Section 10. Amend Title 30 of the Delaware Code by adding thereto a new §1115 to read as follows:
"§1115. Subchapter S -- Business Tax Credits
A resident shareholder in a small business corporation having made a valid election under Subchapter S of the Internal Revenue Code in effect for any tax year shall be allowed as a credit a proportionate share, according to the percentage of the stock in such corporation owned by the resident on the last day of the taxable year of such corporation, of any business tax credits allowed such corporation under Subchapters II, III, or V of Chapter 20 of this Title; provided, however, that such credit shall not exceed 50% times the maximum rate for the tax year under §1102 of this Chapter times the resident's share of the distributable income of the Subchapter S corporation."
Section 11. Amend Title 30 of the Delaware Code by adding thereto a new §2023 to read as follows:
"§2023. Subchapter S Corporations.
Whenever a corporation having made a valid election under Subchapter S of the Internal Revenue Code is subject to tax under Chapter 19 of this Title and is eligible for credits under Subchapters II, III, or V of this Chapter, such credits shall be applied by multiplying the credits calculated under §2011, §2021, or §2041 (credits under §2011 and §2021 to include any adjustments by virtue of §2042, §2043, or §2044 of this title) by the percentage of its stock owned by non-resident individuals on the last day of its tax year."
Section 12. Amend Chapter 20, Title 30 of the Delaware Code by adding thereto a new §2024 to read as follows:
"§2024. Credit against Personal Income Tax,
(a) Notwithstanding any reference in this chapter to Chapter 19 of this title, any taxpayer not subject to taxation under Chapter 19 of this title may claim such credits calculated under §2011, §2021 or §2041 of this Chapter (including adjustments thereto under §2042, §2043 and §2044 of this title); provided, however, that the amount of credit claimed by an individual under Chapter 11 shall not exceed: (1) the multiplicative product of the following: (A) the amount of credit calculated under §2011 or §2021 of this Chapter; and (B) the percentage of ownership in the organization attributable to the taxpayer; or (2) 50% of the amount of tax imposed upon such individual by Chapter 11 of this title for such taxable year; and provided further that §1115 and §2023 of this title and not this section shall govern taxpayers electing under Subchapter S of the Internal Revenue Code and their shareholders."
Section 13. Amend §2010(13), Title 30 of the Delaware Code, by striking said subsection in its entirety and substituting in lieu thereof a new subsection (13) to read as follows:
"(13) 'Taxpayer' means any person or corporation carrying on business in this State including a corporation having made a valid election under Subchapter S of the Internal Revenue Code, irrespective of the state of residence of its shareholders."
Section 14. Amend §2011, Title 30 of the Delaware Code, by adding thereto a new subsection (k) to read as follows:
"(k) Any taxpayer (other than a public utility as defined in Chapter 1, Title 26) that for any taxable year has a qualified investment in a qualified facility that is placed in service by the taxpayer during such taxable year shall be allowed a credit under this section irrespective of the limitations contained in subsections (a)(ii), (b), or (c) of this section; provided, however, as follows:
(1) Such investment must equal or exceed the greater of:
(A) $1 million; or (B) 15% of the unadjusted basis in such facility at the close of the taxable year preceding the date on which installation or construction of the investment described in this paragraph commenced;
2) Substantially all the use of the qualified facility by the taxpayer occurs in the activity of manufacturing or wholesaling as defined respectively in §2701(2) or §2901(7)a. of this title;
The amount of the credit allowed under this subsection shall be 75% of the credit allowable if the taxpayer were eligible for credit under subsection (a) of this section subject, however, to limitation and carryover provisions under subsections (d) and (f) of this section. Credits claimed in any tax year (including amounts carried over from previous tax years) shall not exceed the difference between $500,000 and the amount of credits claimed under §2012 of this chapter for the twelve months comprising said tax year. Amounts of credit not used by virtue of the preceding sentence may be carried forward as if such unused credits arose by virtue of §2011(d);
No facility may be eligible for credits under both this subsection and subsection (a) of this section;
Should the qualified facility be an expanded facility, total wages paid during the taxable year by the taxpayer to qualified employees employed at the qualified facility must equal or exceed 857. of the wages paid by the taxpayer to qualified employees at the same facility during the twelve months preceding the date on which the qualified facility was placed in service; and
Construction of the qualified facility was commenced after the enactment of this Act into law. For purposes of this subsection, construction of a facility shall commence on the date on which site alteration first occurs."
Section 15. Amend §2012, Title 30 of the Delaware Code, by adding to said section a new subsection (c) to read as follows:
"(c) Any taxpayer placing in service a facility meeting the conditions set forth in §2011(k) of this title shall be allowed a reduction in license fees other than those set forth in §2902(c)(4) equal to 75% of the reduction allowable to taxpayers qualifying under subsection (a) of this section; provided, however, that such credits may not exceed $500,000 over their ten year life. No taxpayer may be eligible for reductions under both this subsection and subsection (a) of this section for the same facility."
Section 16. Amend §2021, Title 30 of the Delaware Code, by adding thereto a new subsection (c) to read as follows:
"(c) In the case of any taxpayer that (1) places in service, within any targeted area, as defined by §2020(1) of this title, a qualified facility in which the taxpayer is engaged in a qualified activity described in §2010(3) of this title, and (2) satisfies the requirements contained in §2011(k) of this title, such taxpayer shall be allowed a credit equal to 75% of the credit allowable under subsection (a) of this section, subject, however, to limitation and carryover provisions under §2011(d) and (f) of this Chapter. The credit claimed in any tax year (including amounts carried over from previous tax years) shall not exceed the difference between $500,000 and the amount of credits claimed under §2022 of this title for the twelve months comprising said tax year. Amounts of credit not used by virtue of the preceding sentence may be carried forward as if such unused
credits arose by virtue of §2011(f). No taxpayer may be eligible for credit under both this subsection and subsection (a) of this section for the same facility."
Section 17. Amend §2022, Title 30 of the Delaware Code, by adding thereto a new subsection (c) to read as follows:
"(c) In the case of any taxpayer that (1) places in service, within any targeted area, as defined by §2020(1) of this title, a qualified facility in which the taxpayer is engaged in a qualified activity described in §2010(3) of this title, and (2) satisfies the requirements contained in §2011(k) of this title, such taxpayer shall be allowed a reduction in license fees equal to 75% of the reduction allowable under subsection (a) of this section; provided, however, that said reduction shall be allowed against only those license fees imposed by §2902(c)(1), (3) and (5) and §2702(b)(1) and (3) of this title, that no facility shall be eligible for reduction under both this subsection and subsection (a) of this section, and that credits under this subsection shall not exceed $500,000 over the 180 month life of the credits."
Section 18. Amend §2010(5), Title 30 of the Delaware Code by adding the following sentence to the end of said subsection:
"For property placed in service after July 1, 1992, a facility which constitutes a replacement facility, as defined in subsection (6) of this section, shall be deemed an expanded facility, and the investment shall be deemed a qualified investment, to the extent the taxpayer's investment in the replacement facility exceeds the greater of: (a) 150% of the unadjusted cost basis of the facility which is
being
replaced; or (b) 100% of the market value of the facility which is being replaced."
Section 19. Amend Chapter 20, Title 30 of the Delaware Code, by adding thereto a new Subchapter V to read as follows:
"Subchapter V.
Green Industries Credits
§2040. Definitions
'Toxic Release Inventory' means an inventory of chemical releases as required under the Federal Superfund Amendments and Reauthorization Act of 1986 (42 U.S.C. §9601 et seq.).
'Other wastes' means measurable solid waste products other than those reported under the Toxic Release Inventory and any substances released in the air or in the waters of the State for which a permit has been issued under Chapters 60 or 63 of Title 7.
'Solid waste' means solid waste as defined in §6002 of Title 7.
'Recycled materials' means materials that have been removed from the Delaware solid waste stream and have been processed into a value added material.
'Source reduction' means any practice which reduces the production of waste products prior to recycling, treatment, or disposal.
'Taxpayer' has the same meaning as set forth in §2010(13) of this chapter.
§2041. Reductions in Waste Release.
In the case of any manufacturer, as defined in §2701(2) of this title, who in any taxable year complies with the requirements of subsection (b) there shall be allowed a credit against the tax imposed under Chapter 19 or Chapter 11 by virtue of §1115 or §2024 of this title.
The amount of the credit under subsection (a) shall be either,
(1) In the case of a manufacturer that, by source reduction techniques, voluntarily reduces by at least 20% the weight of wastes reported under the Toxic Release Inventory reflected by Inventory Report forms filed for a year ending in such tax years compared with such amount reported for the immediately preceding twelve months, the credit shall be $250 for each full 10% of waste reduction during said tax year and each of the four succeeding tax years during which such reduced amount of release is maintained, or
(2) In the case of a manufacturer that, during such tax year, by source reduction techniques, voluntarily reduces by at least 50% the weight of other wastes released in the current tax year compared with such amount released in the immediately preceding twelve months, the credit shall be $250 for each full 10% in waste reduction during said tax year and each of the four succeeding tax years during which such reduced amount of release is maintained.
(c) Unused credits may be carried forward for four years following the year in which the credit could otherwise be taken.
§2042. Use of Recycled Materials as Raw Materials of Manufacturing.
In the case of any manufacturer, as defined in §2701(2) of this title, who (1) in any taxable year derives at least 25%, by weight, of its raw materials from either (i) recycled materials or (ii) materials removed from the Delaware solid waste stream; (2) satisfies the requirements of §2011(a) of this title for the allowance of a credit against the tax imposed by Chapter 19 or Chapter 11 by virtue of §1115 or §2024 of this title for the taxable year of the taxpayer in which such qualified facility is placed in service by the taxpayer; and (3) uses such materials in its qualified facility as defined in §2010 of this title, the amount of such credit shall be determined as provided in subsection (b) of this section.
The amount of the credit allowed under subsection (a) shall, for such tax year, be the amount of credit allowed under §2011 of this title applied with respect to such qualified facility by substituting '$500' for '$250' in §2011(b)(1) and (2) of this title; or, in the event the taxpayer also qualifies for credit under §2021 of title, by substituting '$750' instead of '$500' for '$250' in §2011(b)(1) and (2) of this title.
Unused credits may be carried forward for nine years following the year in which the credit could otherwise be taken.
§2043. Processing of Waste Materials.
In the case of any taxpayer, as defined in §2010(13) of this title, who (1) in any taxable year is engaged in the business of processing materials removed from the Delaware solid waste stream for resale as raw materials to persons defined as manufacturers under §2701(2) of this title; (2) satisfies the requirements of §2011(a) of this title for the allowance of a credit against the tax imposed by Chapter 19 or Chapter 11 by virtue of §1115 or §2024 of this title for the taxable year of the taxpayer in which such qualified facility is placed in service by the taxpayer; and (3) whose qualified investment is devoted entirely to the processing and resale of materials removed from the Delaware solid waste stream as described in this section; the amount of such credit shall be determined as provided in subsection (b) of this section.
The amount of the credit allowed under subsection (a) shall be the amount of credit allowed under §2011 of this title applied with respect to such qualified facility by substituting '$500' for '$250' in §2011(b)(1) and (2) of this title; or, in the event the taxpayer also qualifies for credit under §2021 of title by substituting '$750' instead of '$500' for '$250' in §2011(b)(1) and (2) of this title.
Unused credits may be carried forward for nine years following the year in which the credit could otherwise be taken.
§2044. Collection and Distribution of Recycled Materials.
(a) In the case of any taxpayer, as defined In §2010(13) of this title, who (1) in any taxable year is engaged in the business of collecting materials for recycling and distributing recycled materials; (2) satisfies the requirements of §2011(a) of this title for the allowance of a credit against the tax imposed by Chapter 19 or Chapter 11 by virtue of §1115 or §2024 of this title for the taxable year of the taxpayer in which such qualified facility is placed in service by the taxpayer; and (3) whose qualified investment is devoted entirely to collection of materials for recycling and distribution of recycled materials as described in this section; the amount of such credit shall be determined as provided in subsection (b) of this section.
The amount of the credit against tax allowed under subsection (a) shall, for such tax year, be the amount of credit allowed under §2011 of this title applied with respect to such qualified facility by substituting '$500' for '$250' in §2011(b)(1) and (2) of this title; or, in the event the taxpayer also qualifies for credit under §2021 of title by substituting '$750' instead of '$500' for '$250' In §2011(b)(1) and (2) of this title.
Unused credits may be carried forward for nine years following the year in which the credit could otherwise be taken.
§2045. Exceptions and Procedures.
No taxpayer is eligible for any credit under this Subchapter unless and until a determination of eligibility has been made by both the Director of the Delaware Development Office and the Secretary of the Department of Natural Resources and Environmental Control and certified in writing to the Director of Revenue, who shall implement said determination. A
determination as to the eligibility of a taxpayer for credit under this Subchapter and to the amount of such credit shall be reviewable by the Superior Court only for abuse of discretion and, in any case,
notwithstanding §329 of this title, shall not be appealable to the Tax Appeal Board.
No taxpayer shall be eligible for any credit under this Subchapter if, within twelve months immediately prior to application, but after the effectiveness of this Subchapter, the taxpayer or any of its executive officers or directors has been convicted of any criminal offense involving environmental pollution or has been the subject of any administrative penalty or order by the Department of Natural Resources and Environment Control or any agency of the United States by which it was finally determined that the taxpayer violated any state or federal statute or regulation prohibiting environmental pollution.
The credits allowed under this. subchapter are exclusive of one another, and a taxpayer may claim creditsunder only one of sections 2041, 2042, 2043, or 2044 of this title in any tax year."
Section 20. If any provision of this Act, or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of this Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.
Section 21. This Act shall be effective for tax years ending after December 31, 1991; provided that subsequent limitations on effectiveness shall be as stated in the Act.
Approved February 6, 1992.