AN ACT relating to an income tax credit for qualified employers.

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AN ACT relating to an income tax credit for qualified employers. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
SECTION 1. A NEW SECTION OF KRS CHAPTER 141 IS CREATED TO 3
READ AS FOLLOWS: 4
(1) As used in this section: 5
(a) "Certificate of employability" means a certificate of employability issued to 6
an individual under KRS 196.281; 7
(b) "Eligible employee" mea ns an individual who holds a valid certificate of 8
employability; 9
(c) "Enhanced incentive county" means a county certified by the Kentucky 10
Economic Development Finance Authority pursuant to KRS 154.32 -050; 11
and 12
(d) "Qualified employer" means a business or organization within the 13
Commonwealth that hires an eligible employee. 14
(2) For taxable years beginning on or after January 1, 2027, but before January 1, 15
2031, there shall be allowed a nonrefundable, nontransferable eligible employee 16
credit against the taxes imposed by KRS 141.020 or 141.040 and 141.0401, with 17
the ordering of the credit as provided in Section 2 of this Act. 18
(3) A qualified employer that hires an eligible employee shall be allowed a credit 19
under this section based on the amount of wages paid to the eligible employee for 20
the taxable year; and the credit shall: 21
(a) Not exceed fifty percent (50%) of the wages paid to an eligible employee; 22
and 23
(b) Be limited to: 24
1. Two thousand dollars ($2,000) per eligible employee; or 25
2. Three thousand five hundred dollars ($3,500) per eligible employee if: 26
a. The eligible employee is a resident of an enhanced incentive 27
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county; or 1
b. The qualified employer is located in an enhanced incentive 2
county. 3
(4) Wages that are included in the computation for credit under this section shall not 4
be included for any other credit computation aga inst the tax imposed in KRS 5
141.020 or 141.040 and 141.0401. 6
(5) Qualified employers seeking the credit under this section shall provide, at the 7
request of the department: 8
(a) Verification that the eligible employee holds a valid certificate of 9
employability; 10
(b) The name and Social Security number of the eligible employee; 11
(c) Verification of the wages paid to the eligible employee included in credit 12
computation; 13
(d) Verification that either the: 14
1. Qualified employer; or 15
2. Eligible employee; 16
is located in an enhanced incentive county if the credit is claimed based on 17
county location; and 18
(e) Any other information the department deems necessary. 19
(6) The department shall work cooperatively with the Department of Corrections to 20
determine that the eligible e mployee meets the requirements established in this 21
section. 22
(7) (a) By November 1 of each year in which an eligible employee credit is claimed, 23
the department shall report to the Legislative Research Commission for 24
referral to the Interim Joint Committee on Appropriations and Revenue: 25
1. The number of tax returns, by tax type, claiming the credit for each 26
taxable year; 27
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2. The total amount of credits claimed for each taxable year; 1
3. The cumulative number of eligible employees employed for each 2
taxable year; 3
4. The cumulative total of credit claimed by county, based on the work 4
location for the eligible employee hired, for each taxable year; and 5
5. a. In the case of all taxpayers other than corporations, based on 6
ranges of adjusted gross income of no larger than five thousand 7
dollars ($5,000) for the taxable year, the total amount of credit 8
claimed and the total number of returns claiming this credit fo r 9
each income range; and 10
b. In the case of all corporations, based on ranges of net income no 11
larger than fifty thousand dollars ($50,000) for the taxable year, 12
the total amount of credit claimed and the number of returns 13
claiming a credit for each net income range. 14
(b) The information required to be reported under this section shall not be 15
considered confidential taxpayer information and shall not be subject to 16
KRS Chapter 131 or any other provisions of the Kentucky Revised Statutes 17
prohibiting disclosure or reporting of information. 18
Section 2. KRS 141.0205 is amended to read as follows: 19
If a taxpayer is entitled to more than one (1) of the tax credits allowed against the tax 20
imposed by KRS 141.020, 141.040, and 141.0401, the priority of application and use of 21
the credits shall be determined as follows: 22
(1) The nonrefundable business incentive credits against the tax imposed by KRS 23
141.020 shall be taken in the following order: 24
(a) The limited liability entity tax credit permitted by KRS 141.0401; 25
(b) The economic development credits computed under KRS 141.347, 141.381, 26
141.384, 141.3841, 141.400, 141.403, 141.407, 141.415, 154.12 -207, and 27
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154.12-2088; 1
(c) The qualified farming operation credit permitted by KRS 141.412; 2
(d) The certified rehabilitation credit permitted by KRS 171.397(1)(a); 3
(e) The health insurance credit permitted by KRS 141.062; 4
(f) The tax paid to other states credit permitted by KRS 141.070; 5
(g) The credit for hiring the unemployed permitted by KRS 141.065; 6
(h) The recycling or composting equipment credit permitted by KRS 141.390; 7
(i) The [tax ]credit for cash contributions in investment funds permitted by KRS 8
154.20-263 in effect prior to July 15, 2002, and the credit permitted by KRS 9
154.20-258; 10
(j) The research facilities credit permitted by KRS 141.395; 11
(k) The employer High School Equivalency Diploma program incentive credit 12
permitted under KRS 151B.402; 13
(l) The voluntary environmental remediation credit permitted by KRS 141.418; 14
(m) The biodiesel and renewable diesel credit permitted by KRS 141.423; 15
(n) The clean coal incentive credit permitted by KRS 141.428; 16
(o) The ethanol credit permitted by KRS 141.4242; 17
(p) The cellulosic ethanol credit permitted by KRS 141.4244; 18
(q) The energy efficiency credits permitted by KRS 141.436; 19
(r) The railroad maintenance and improvement credit permitted by KRS 141.385; 20
(s) The Endow Kentucky credit permitted by KRS 141.438; 21
(t) The New Markets Development Program credit permitted by KRS 141.434; 22
(u) The distilled spirits credit permitted by KRS 141.389; 23
(v) The angel investor credit permitted by KRS 141.396; 24
(w) The film industry credit permitted by KRS 141.383 for applications approved 25
on or after April 27, 2018, but before January 1, 2022; 26
(x) The inventory credit permitted by KRS 141.408; 27
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(y) The renewable chemical production credit permitted by KRS 141.4231;[ and] 1
(z) The qualified broadband investment [tax ]credit permitted by KRS 141.391; 2
and 3
(aa) The eligible employee credit permitted by Section 1 of this Act; 4
(2) After the application of the nonrefundable credits in subsection (1) of this section, 5
the nonrefundable personal tax credits against the tax imposed by KRS 141.020 6
shall be taken in the following order: 7
(a) The individual credits permitted by KRS 141.020(3); 8
(b) The credit permitted by KRS 141.066; 9
(c) The tuition credit permitted by KRS 141.069; 10
(d) The household and dependent care credit permitted by KRS 141.067; 11
(e) The income gap credit permitted by KRS 141.066; and 12
(f) The Education Opportunity Account Program [tax ]credit permitted by KRS 13
141.522; 14
(3) After the application of the nonrefundable credits provided for in subsection (2) of 15
this section, the refundable credits against the tax imposed by KRS 141.020 shall be 16
taken in the following order: 17
(a) The individual withholding tax credit permitted by KRS 141.350; 18
(b) The individual estimated tax payment credit permitted by KRS 141.305; 19
(c) The certified rehabilitation credit permitted by KRS 171.3961, 171.3963, and 20
171.397(1)(b); 21
(d) The film industry [tax ] credit permitted by KRS 141.383 for applications 22
approved prior to April 27, 2018, or on or after January 1, 2022; 23
(e) The development area [tax ]credit permitted by KRS 141.398; 24
(f) The decontamination [tax ]credit permitted by KRS 141.419; and 25
(g) The pass-through entity tax credit permitted by KRS 141.209; 26
(4) The nonrefundable credit permitted by KRS 141.0401 shall be applied against the 27
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tax imposed by KRS 141.040; 1
(5) The following nonrefundable credits shall be app lied against the sum of the tax 2
imposed by KRS 141.040 after subtracting the credit provided for in subsection (4) 3
of this section, and the tax imposed by KRS 141.0401 in the following order: 4
(a) The economic development credits computed under KRS 141.347, 141.381, 5
141.384, 141.3841, 141.400, 141.403, 141.407, 141.415, 154.12 -207, and 6
154.12-2088; 7
(b) The qualified farming operation credit permitted by KRS 141.412; 8
(c) The certified rehabilitation credit permitted by KRS 171.397(1)(a); 9
(d) The health insurance credit permitted by KRS 141.062; 10
(e) The unemployment credit permitted by KRS 141.065; 11
(f) The recycling or composting equipment credit permitted by KRS 141.390; 12
(g) The coal conversion credit permitted by KRS 141.041; 13
(h) The enterprise zone credit permitted by KRS 154.45 -090, for taxable periods 14
ending prior to January 1, 2008; 15
(i) The [tax ]credit for cash contributions to investment funds permitted by KRS 16
154.20-263 in effect prior to July 15, 2002, and the credit permitted by KRS 17
154.20-258; 18
(j) The research facilities credit permitted by KRS 141.395; 19
(k) The employer High School Equivalency Diploma program incentive credit 20
permitted by KRS 151B.402; 21
(l) The voluntary environmental remediation credit permitted by KRS 141.418; 22
(m) The biodiesel and renewable diesel credit permitted by KRS 141.423; 23
(n) The clean coal incentive credit permitted by KRS 141.428; 24
(o) The ethanol credit permitted by KRS 141.4242; 25
(p) The cellulosic ethanol credit permitted by KRS 141.4244; 26
(q) The energy efficiency credits permitted by KRS 141.436; 27
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(r) The ENERGY STAR home or ENERGY STAR manufactured home credit 1
permitted by KRS 141.437; 2
(s) The railroad maintenance and improvement credit permitted by KRS 141.385; 3
(t) The railroad expansion credit permitted by KRS 141.386; 4
(u) The Endow Kentucky credit permitted by KRS 141.438; 5
(v) The New Markets Development Program credit permitted by KRS 141.434; 6
(w) The distilled spirits credit permitted by KRS 141.389; 7
(x) The film industry credit permitted by KRS 141.383 for applications approved 8
on or after April 27, 2018, but before January 1, 2022; 9
(y) The inventory credit permitted by KRS 141.408; 10
(z) The renewable chemical production [tax ]credit permitted by KRS 141.4231; 11
(aa) The Education Opportunity Account Program [tax ]credit permitted by KRS 12
141.522;[ and] 13
(ab) The qualified broadband investment [tax ]credit permitted by KRS 141.391; 14
and 15
(ac) The eligible employee credit permitted by Section 1 of this Act; and 16
(6) After the application of the nonrefundable credits in subsection (5) of this section, 17
the refundable credits shall be taken in the following order: 18
(a) The corporation estimated tax payment credit permitted by KRS 141.044; 19
(b) The certified rehabilitation credit permitted by KRS 171.3961, 171.3963, and 20
171.397(1)(b); 21
(c) The film industry [tax ] credit permitted by KRS 141.383 for applications 22
approved prior to April 27, 2018, or on or after January 1, 2022; 23
(d) The decontamination [tax ]credit permitted by KRS 141.419; and 24
(e) The pass-through entity tax credit permitted by KRS 141.209. 25
Section 3. KRS 131.190 is amended to read as follows: 26
(1) No pres ent or former commissioner or employee of the department, present or 27
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former member of a county board of assessment appeals, present or former property 1
valuation administrator or employee, present or former secretary or employee of the 2
Finance and Administration Cabinet, former secretary or employee of the Revenue 3
Cabinet, or any other person, shall intentionally and without authorization inspect 4
or divulge any information acquired by him or her of the affairs of any person, or 5
information regarding the tax schedules, returns, or reports required to be filed with 6
the department or other proper officer, or any information produced by a hearing or 7
investigation, insofar as the information may have to do with the affairs of the 8
person's business. 9
(2) The prohibition established by subsection (1) of this section shall not extend to: 10
(a) Information required in prosecutions for making false reports or returns of 11
property for taxation, or any other infraction of the tax laws; 12
(b) Any matter properly entered upon any assessment record, or in any way made 13
a matter of public record; 14
(c) Furnishing any taxpayer or his or her properly authorized agent with 15
information respecting his or her own return; 16
(d) Testimony provided by the commissioner or any employee of the depar tment 17
in any court, or the introduction as evidence of returns or reports filed with the 18
department, in an action for violation of state or federal tax laws or in any 19
action challenging state or federal tax laws; 20
(e) Providing an owner of unmined coal, oil or gas reserves, and other mineral or 21
energy resources assessed under KRS 132.820, or owners of surface land 22
under which the unmined minerals lie, factual information about the owner's 23
property derived from third-party returns filed for that owner's property, under 24
the provisions of KRS 132.820, that is used to determine the owner's 25
assessment. This information shall be provided to the owner on a confidential 26
basis, and the owner shall be subject to the penalties provided in KRS 27
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131.990(2). The third -party filer shall be given prior notice of any disclosure 1
of information to the owner that was provided by the third-party filer; 2
(f) Providing to a third -party purchaser pursuant to an order entered in a 3
foreclosure action filed in a court of competent jurisdi ction, factual 4
information related to the owner or lessee of coal, oil, gas reserves, or any 5
other mineral resources assessed under KRS 132.820. The department may 6
promulgate an administrative regulation establishing a fee schedule for the 7
provision of the information described in this paragraph. Any fee imposed 8
shall not exceed the greater of the actual cost of providing the information or 9
ten dollars ($10); 10
(g) Providing information to a licensing agency, the Transportation Cabinet, or 11
the Kentucky Supreme Court under KRS 131.1817; 12
(h) Statistics of gasoline and special fuels gallonage reported to the department 13
under KRS 138.210 to 138.448; 14
(i) Providing any utility gross receipts license tax return information that is 15
necessary to administer the provisio ns of KRS 160.613 to 160.617 to 16
applicable school districts on a confidential basis; 17
(j) Providing documents, data, or other information to a third party pursuant to an 18
order issued by a court of competent jurisdiction; 19
(k) Publishing administrative writin gs on its official website in accordance with 20
KRS 131.020(1)(b); or 21
(l) Providing information to the Legislative Research Commission under: 22
1. KRS 139.519 for purposes of the sales and use tax refund on building 23
materials used for disaster recovery; 24
2. KRS 141.436 for purposes of the energy efficiency products credits; 25
3. KRS 141.437 for purposes of the ENERGY STAR home and the 26
ENERGY STAR manufactured home credits; 27
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4. KRS 141.383 for purposes of the film industry incentives; 1
5. KRS 154.26-095 for purposes of the Kentucky industrial revitalization 2
credit and the job assessment fees; 3
6. KRS 141.068 for purposes of the Kentucky investment fund; 4
7. KRS 141.396 for purposes of the angel investor credit; 5
8. KRS 141.389 for purposes of the distilled spirits credit; 6
9. KRS 141.408 for purposes of the inventory credit; 7
10. KRS 141.390 for purposes of the recycling and composting credits; 8
11. KRS 141.3841 for purposes of the selling farmer credit; 9
12. KRS 141.4231 for purposes of the renewa ble chemical production 10
credit; 11
13. KRS 141.524 for purposes of the Education Opportunity Account 12
Program credit; 13
14. KRS 141.398 for purposes of the development area credit; 14
15. KRS 139.516 for purposes of the sales and use tax exemptions for the 15
commercial mining of cryptocurrency; 16
16. KRS 141.419 for purposes of the decontamination credit; 17
17. KRS 141.391 for purposes of the qualified broadband investment credit; 18
18. KRS 139.499 for purposes of the sales and use tax exemptions for a 19
qualified data center project;[ and] 20
19. KRS 139.5325 for purposes of the sales and use tax incentive for a 21
qualifying attraction; and 22
20. Section 1 of this Act for purposes of the eligible employee credit. 23
(3) The commissioner shall make available any information for official use only and on 24
a confidential basis to the proper officer, agency, board or commission of this state, 25
any Kentucky county, any Kentucky city, any other state, or the federal 26
government, under reciprocal agreements whereby the department shall receive 27
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similar or useful information in return. 1
(4) Access to and inspection of information received from the Internal Revenue Service 2
is for department use only, and is restricted to tax administration purposes. 3
Information received from the Internal Revenue Service shall not be made available 4
to any other agency of state government, or any county, city, or other state, and 5
shall not be inspected intentionally and without authorization by any present 6
secretary or employee of the Finance and Administration Cabinet, c ommissioner or 7
employee of the department, or any other person. 8
(5) Statistics of crude oil as reported to the department under the crude oil excise tax 9
requirements of KRS Chapter 137 and statistics of natural gas production as 10
reported to the department under the natural resources severance tax requirements 11
of KRS Chapter 143A may be made public by the department by release to the 12
Energy and Environment Cabinet, Department for Natural Resources. 13
(6) Notwithstanding any provision of law to the contrary, be ginning with mine -map 14
submissions for the 1989 tax year, the department may make public or divulge only 15
those portions of mine maps submitted by taxpayers to the department pursuant to 16
KRS Chapter 132 for ad valorem tax purposes that depict the boundaries of mined-17
out parcel areas. These electronic maps shall not be relied upon to determine actual 18
boundaries of mined-out parcel areas. Property boundaries contained in mine maps 19
required under KRS Chapters 350 and 352 shall not be construed to constitute land 20
surveying or boundary surveys as defined by KRS 322.010 and any administrative 21
regulations promulgated thereto. 22