AN ACT relating to economic development.

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AN ACT relating to economic development. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
SECTION 1. A NEW SECTION OF SUBCHAPTER 32 OF KRS CHAPTER 3
154 IS CREATED TO READ AS FOLLOWS: 4
(1) The authority is hereby authorized to negotiate and execute a tax incentive 5
agreement pursuant to this subchapter based on the tiering system provided in 6
Section 5 of this Act. Project tax credit amounts may be: 7
(a) Two thousand five hundred dollars ($2,500) per new job created in Tier I 8
counties; 9
(b) Five thousand dollars ($5,000) per new job created in Tier II counties; 10
(c) Ten thousand dollars ($10,000) per new job created in Tier III counties; 11
and 12
(d) Twenty thousand dollars ($20,000) per new job created in Tier IV counties. 13
(2) If an eligible company establishes or expands its headquarters in Kentucky and 14
creates at least forty (40) new jobs, the eligible company may receive a tax credit 15
equal to twenty percent (20%) of the value of the facility dedicated to the 16
headquarters operations for up to ten (10) years. 17
(3) Eligible companies may choose the taxable year to claim th e tax credit negotiated 18
under this subchapter. The credit shall not be claimed on a return filed for a 19
previous taxable year. 20
(4) (a) The tax incentive agreement established pursuant to this subchapter shall 21
indicate the taxable year in which the credit shall be claimed. 22
(b) The authority shall report the credit amount and taxable year for which the 23
credit may be claimed. 24
(c) The taxable year for when the credit shall be claimed shall not exceed more 25
than four (4) taxable years after the date of final approval. 26
Section 2. KRS 154.32-010 is amended to read as follows: 27
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(1) "Activation date" means the date established in the tax incentive agreement that is 1
within two (2) years of final approval; 2
(2) "Affiliate" means the following: 3
(a) Members of a family, including only brothers and sisters of the whole or half 4
blood, spouse, ancestors, and lineal descendants of an individual; 5
(b) An individual, and a corporation more than fifty percent (50%) in value of the 6
outstanding stock of which is owned, directly or indirectly, by or for that 7
individual; 8
(c) An individual, and a limited liability company of which more than fifty 9
percent (50%) of the capital interest or profits are owned or controlled, 10
directly or indirectly, by or for that individual; 11
(d) Two (2) corporations which are members of the same controlled group, which 12
includes and is limited to: 13
1. One (1) or more chains of corporations connected through stock 14
ownership with a common parent corporation if: 15
a. Stock possessing more than fifty percent (50%) of the total 16
combined voting power of all classes of stock entitled to vote or 17
more than fifty percent (50%) of the total value of shares of all 18
classes of stock of each of the corporations, except the common 19
parent corporatio n, is owned by one (1) or more of the other 20
corporations; and 21
b. The common parent corporation owns stock possessing more than 22
fifty percent (50%) of the total combined voting power of all 23
classes of stock entitled to vote or more than fifty percent (50%) of 24
the total value of shares of all classes of stock of at least one (1) of 25
the other corporations, excluding, in computing the voting power 26
or value, stock owned directly by the other corporations; or 27
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2. Two (2) or more corporations if five (5) or fewer p ersons who are 1
individuals, estates, or trusts own stock possessing more than fifty 2
percent (50%) of the total combined voting power of all classes of stock 3
entitled to vote or more than fifty percent (50%) of the total value of 4
shares of all classes of stock of each corporation, taking into account the 5
stock ownership of each person only to the extent the stock ownership is 6
identical with respect to each corporation; 7
(e) A grantor and a fiduciary of any trust; 8
(f) A fiduciary of a trust and a fiduciary of another trust, if the same person is a 9
grantor of both trusts; 10
(g) A fiduciary of a trust and a beneficiary of that trust; 11
(h) A fiduciary of a trust and a beneficiary of another trust, if the same person is a 12
grantor of both trusts; 13
(i) A fiduciary of a trust and a corporation more than fifty percent (50%) in value 14
of the outstanding stock of which is owned, directly or indirectly, by or for the 15
trust or by or for a person who is a grantor of the trust; 16
(j) A fiduciary of a trust and a limited liability co mpany more than fifty percent 17
(50%) of the capital interest, or the interest in profits, of which is owned 18
directly or indirectly, by or for the trust or by or for a person who is a grantor 19
of the trust; 20
(k) A corporation, a partnership, or a limited partnership if the same persons own: 21
1. More than fifty percent (50%) in value of the outstanding stock of the 22
corporation; and 23
2. More than fifty percent (50%) of the capital interest, or the profits 24
interest, in the partnership or limited partnership; 25
(l) A corporation and a limited liability company if the same persons own: 26
1. More than fifty percent (50%) in value of the outstandi ng stock of the 27
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corporation; and 1
2. More than fifty percent (50%) of the capital interest or the profits in the 2
limited liability company; 3
(m) A partnership or limited partnership and a limited liability company if the 4
same persons own: 5
1. More than fifty percent (50%) of the capital interest or profits in the 6
partnership or limited partnership; and 7
2. More than fifty percent (50%) of the capital interest or the profits in the 8
limited liability company; 9
(n) An S corporation and another S corporation if the same persons own more 10
than fifty percent (50%) in value of the outstanding stock of each corporation; 11
S corporation designation being the same as that designation under the 12
Internal Revenue Code of 1986, as amended; 13
(o) An S corporation and a C corporation , if the same persons own more than 14
fifty percent (50%) in value of the outstanding stock of each corporation; S 15
and C corporation designations being the same as those designations under the 16
Internal Revenue Code of 1986, as amended; or 17
(p) Two (2) or more limited liability companies, if the same persons own more 18
than fifty percent (50%) of the capital interest or are entitled to more than fifty 19
percent (50%) of the capital profits in the limited liability companies; 20
(3) "Agribusiness" means the processing of raw agricultural products, including but not 21
limited to timber and industrial hemp, or the performance of value -added functions 22
with regard to raw agricultural products; 23
(4) "Alternative fuel production" means a Kentucky operation that primarily produce s 24
alternative transportation fuels for sale. The alternative fuel production may 25
produce electricity as a by-product if the primary function of the operations remains 26
the production and sale of alternative transportation fuels; 27
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(5) "Alternative transportation fuels" has the same meaning as in KRS 152.715; 1
(6) "Approved company" means an eligible company that has received final approval 2
to receive incentives under this subchapter; 3
(7) "Approved costs" means the amount of eligible costs approved by the authority at 4
final approval; 5
(8) "Authority" means the Kentucky Economic Development Finance Authority 6
established by KRS 154.20-010; 7
(9) "Biomass resources" has the same meaning as in KRS 152.715; 8
(10) "Capital lease" means a lease classified as a capital lease by the Statement of 9
Financial Accounting Standards No. 13, Accounting for Leases, issued by the 10
Financial Accounting Standards Board, November 1976, as amended; 11
(11) "Carbon dioxide or hydrogen transmission pipeline" means the in -state portion of a 12
pipeline, including appurtenant facilities, property rights, and easements, that is 13
used exclusively for the purpose of transporting carbon dioxide or hydrogen to the 14
point of sale, storage, or other carbon or hydrogen management applications; 15
(12) "Coal severing and processing" means activities resulting in the eligible company 16
being subject to the tax imposed by KRS Chapter 143; 17
(13) "Commonwealth" means the Commonwealth of Kentucky; 18
(14) "Confirmed approved costs" means: 19
(a) For owned economic development proj ects, the documented eligible costs 20
incurred on or before the activation date; or 21
(b) For leased economic development projects: 22
1. The documented eligible costs incurred on or before the activation date; 23
and 24
2. Estimated rent to be incurred by the approved company throughout the 25
term of the tax incentive agreement. 26
For both owned and leased economic development projects, "confirmed approved 27
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costs" may be less than approved costs, but shall not be more than approved costs; 1
(15) "Department" means the Department of Revenue; 2
(16) "Economic development project" means: 3
(a) The acquisition, leasing, or construction of a new facility; 4
(b) The acquisition, leasing, rehabilitation, or expansion of an existing facility; or 5
(c) The installation and equipping of a facility; 6
by an eligible company. "Economic development project" does not include any 7
economic development project that will result in the replacement of facilities 8
existing in the Commonwealth, except as provided in KRS 154.32-060; 9
(17) (a) "Eligible company" means any corporation, limited liability company, 10
partnership, limited partnership, sole proprietorship, business trust, or any 11
other entity with a proposed economic development project that is engaged in 12
or i s planning to be engaged in one (1) or more of the following activities 13
within the Commonwealth: 14
1. Manufacturing; 15
2. Agribusiness; 16
3. Nonretail service or technology; 17
4. Headquarters operations, regardless of the underlying business activity 18
of the company; 19
5. Alternative fuel, gasification, energy -efficient alternative fuel, or 20
renewable energy production; 21
6. Carbon dioxide or hydrogen transmission pipeline; 22
7. Coal severing and processing; or 23
8. Hospital operations. 24
(b) "Eligible company" does not includ e companies where the primary activity to 25
be conducted within the Commonwealth is forestry, fishing, the provision of 26
utilities, construction, wholesale trade, retail trade, real estate, rental and 27
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leasing, educational services, accommodation and food serv ices, or public 1
administration services; 2
(18) "Eligible costs" means: 3
(a) For owned economic development projects: 4
1. Start-up costs; 5
2. Nonrecurring obligations incurred for labor and nonrecurring payments 6
to contractors, subcontractors, builders, and mat erialmen in connection 7
with the economic development project; 8
3. The cost of acquiring land or rights in land and any cost incidental 9
thereto, including recording fees; 10
4. The cost of contract bonds and of insurance of all kinds that may be 11
required or nec essary for completion of an economic development 12
project which is not paid by a contractor or otherwise provided for; 13
5. All costs of architectural and engineering services, including test 14
borings, surveys, estimated plans and specifications, preliminary 15
investigations, and supervision of construction, as well as for the 16
performance of all the duties required for construction of the economic 17
development project; 18
6. All costs which are required to be pai d under the terms of any contract 19
for the economic development project; 20
7. All costs incurred for construction activities, including site tests and 21
inspections; subsurface site work; excavation; removal of structures, 22
roadways, cemeteries, and other surfac e obstructions; filling, grading, 23
and providing drainage and storm water retention; installation of utilities 24
such as water, sewer, sewage treatment, gas, electric, communications, 25
and similar facilities; off -site construction of utility extensions to the 26
boundaries of the real estate; construction and installation of railroad 27
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spurs as needed to connect the economic development project to existing 1
railways; or similar activities as the authority may determine necessary 2
for construction of the economic development project; and 3
8. All other costs of a nature comparable to those described above; and 4
(b) For leased economic development projects: 5
1. Start-up costs; 6
2. Building/leasehold improvements; and 7
3. Fifty percent (50%) of the estimated annual rent for eac h year of the tax 8
incentive agreement. 9
Notwithstanding any other provision of this subsection, for economic development 10
projects that are not in enhanced incentive counties, the cost of equipment eligible 11
for recovery as an eligible cost shall not exceed twenty thousand dollars ($20,000) 12
for each new full-time job created as of the activation date; 13
(19) "Employee benefits" means payments by an approved company for its full -time 14
employees for health insurance, life insurance, dental insurance, vision insura nce, 15
defined benefits, 401(k), or similar plans; 16
(20) "Energy-efficient alternative fuel production" means a Kentucky operation that 17
produces for sale energy-efficient alternative fuels; 18
(21) "Energy-efficient alternative fuels" means homogeneous fuels that: 19
(a) Are produced from processes designed to densify feedstock coal, waste coal, 20
or biomass resources; and 21
(b) Have an energy content that is greater than the feedstock coal, waste coal, or 22
biomass resource; 23
(22) "Enhanced incentive counties" means count ies certified as Tier III or Tier IV by 24
the authority pursuant to KRS 154.32-050; 25
(23) "Final approval" means the action taken by the authority authorizing the eligible 26
company to receive incentives under this subchapter; 27
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(24) (a) "Full-time job" means a job held by a person who: 1
1. Is required to work a minimum of thirty-five (35) hours per week; and 2
2. a. Is subject to the Kentucky individual income tax imposed by KRS 3
141.020; or 4
b. Works remotely away from the economic development project if 5
the job meets all of the following conditions: 6
i. Is held by a Kentucky resident; 7
ii. Was created as a result of the economic development project; 8
and 9
iii. The payroll of this job is expensed to the economic 10
development project. 11
(b) "Full-time job" does not include a job held by a resident of any state with a 12
reciprocal agreement between the Commonwealth and the other state as 13
described in KRS 141.070; 14
(25) "Gasification process" means a process that converts any carbon -containing 15
material into a synthesis gas composed primarily of carbon monoxide and 16
hydrogen; 17
(26) "Gasification production" means a Kentucky operation that primarily produces for 18
sale: 19
(a) Alternative transportation fuels; 20
(b) Synthetic natural gas; 21
(c) Chemicals; 22
(d) Chemical feedstocks; or 23
(e) Liquid fuels; 24
from coal, waste coal, coal -processing waste, or biomass resources, through a 25
gasification process. The gasification production may produce electricity as a by -26
product if the primary function of the operations rem ains the production and sale of 27
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alternative transportation fuels, synthetic natural gas, chemicals, chemical 1
feedstocks, or liquid fuels; 2
(27) "Headquarters" means the principal office where the principal executives of the 3
entity are located and from which other personnel, branches, affiliates, offices, or 4
entities are controlled; 5
(28) "Hospital" means a facility licensed by the Cabinet for Health and Family Services 6
under KRS Chapter 216B for the operation of a hospital and the basic services 7
provided by a hospital; 8
(29) "Incentives" means the incentives available under this subchapter, as listed in KRS 9
154.32-020(3); 10
(30) "Job target" means the annual average number of new full -time jobs that the 11
approved company commits to create and maintain at the econo mic development 12
project, which shall not be less than ten (10) new full -time jobs in Tier I and Tier 13
II counties or five (5) new full-time jobs in Tier III and Tier IV counties; 14
(31) "Kentucky gross receipts" has the same meaning as in KRS 141.0401; 15
(32) "Kentucky gross profits" has the same meaning as in KRS 141.0401; 16
(33) "Lease agreement" means an agreement between an approved company and an 17
unrelated entity conveying the right to use a facility, the terms of which reflect an 18
arms' length transaction. "Lease agreement" does not include a capital lease; 19
(34) "Leased project" means an economic development project site occupied by an 20
approved company pursuant to a lease agreement; 21
(35) "Manufacturing" means any activity involving: 22
(a) Processing, assembling, or production of any property, including the 23
processing resulting in a change in the conditions of the property and any 24
activity related to the processing, assembling, or production of property, 25
together with the storage, warehousing, distribution, and re lated office 26
facilities; or 27
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(b) Production of vital medications, personal protective equipment, or equipment 1
necessary to produce personal protective equipment; 2
(36) (a) "Nonretail service or technology" means any activity where service or 3
technology is pr ovided predominantly outside the Commonwealth and 4
designed to serve a multistate, national, or international market. 5
(b) "Nonretail service or technology" includes but is not limited to call centers, 6
centralized administrative or processing centers, teleph one or Internet sales 7
order or processing centers, distribution or fulfillment centers, data processing 8
centers, research and development facilities, and other similar activities; 9
(37) "Owned project" means an economic development project owned in fee simp le by 10
the approved company or an affiliate, or possessed by the approved company or an 11
affiliate pursuant to a capital lease; 12
(38) "Personal protective equipment" means protective clothing, helmets, gloves, face 13
shields, goggles, face masks, respirators, a nd other equipment designed to protect 14
the user from injury or the spread of infection or illness; 15
(39) "Preliminary approval" means the action taken by the authority preliminarily 16
approving an eligible company for incentives under this subchapter; 17
(40) "Renewable energy production" means a Kentucky operation that utilizes wind 18
power, biomass resources, landfill methane gas, hydropower, solar power, or other 19
similar renewable resources to generate electricity for sale to unrelated entities; 20
(41) "Rent" means the actual annual rent or fee paid by an approved company under a 21
lease agreement; 22
(42) "Start-up costs" means nonrecurring costs incurred to furnish and equip a facility 23
for an economic development project, including costs incurred for: 24
(a) Computers, f urnishings, office equipment, manufacturing equipment, and 25
fixtures; 26
(b) The relocation of out-of-state equipment; and 27
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(c) Cost of fixed telecommunications equipment; 1
as certified to the authority in accordance with KRS 154.32-030; 2
(43) "Synthetic natural gas" means the same thing as in KRS 152.715; 3
(44) "Tax incentive agreement" means the agreement entered into pursuant to KRS 4
154.32-040 between the authority and an approved company; 5
(45) "Term" means the period of time for which a tax incentive agreement may be in 6
effect, which shall not exceed fifteen (15) years for an economic development 7
project located in an enhanced incentive county, or ten (10) years for an econo mic 8
development project located in a Tier I or Tier II county [not located in any other 9
county]; 10
(46) "Tier" means the sorting of all Kentucky counties into quartiles based on each 11
county's unemployment rate and population ranking pursuant to Section 5 of t his 12
Act; 13
(47)[(46)] "Vital medications" means any drug or biologic used to prevent or treat a 14
serious life -threatening disease or medical condition for which there is no other 15
available source with sufficient supply of that drug or biologic or alternative drug or 16
biologic; 17
(48)[(47)] "Wage" means the per hour earnings of a full -time employee, including 18
wages, tips, overtime, bonuses, and commissions, as reflected on the employee's 19
federal form W-2 wage and tax statement, but excludes employee benefits; and 20
(49)[(48)] "Wage target" means the average total hourly compensation amount, 21
including the minimum wage and employee benefits, that the approved company 22
commits to meet for all new full -time jobs created and maintained as a result of the 23
economic development project, which shall not be less than: 24
(a) One hundred twenty -five percent (125%) of the federal minimum wage in 25
enhanced incentive counties; or 26
(b) One hundred fifty percent (150%) of the federal minimum wage in all other 27
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counties. 1
Section 3. KRS 154.32-020 is amended to read as follows: 2
(1) The purposes of this subchapter are: 3
(a) To provide incentives for eligible companies and to encourage the location or 4
expansion of manufacturing facilities, agribusiness operatio ns, nonretail 5
service or technology facilities, headquarters operations, alternative fuel 6
production facilities, gasification production facilities, energy -efficient 7
alternative fuel production facilities, renewable energy production facilities, 8
carbon dio xide or hydrogen transmission pipelines, coal severing and 9
processing, and hospital operations in the Commonwealth to advance the 10
public purposes of: 11
1. Creation of new jobs that, but for the incentives offered by the authority, 12
would not exist within the Commonwealth; 13
2. Creation of new sources of tax revenues for the support of public 14
services provided by the Commonwealth; 15
3. Improvement in the quality of life for Kentucky citizens through the 16
creation of sustainable jobs with higher salaries; and 17
4. Providing an economic stimulus to bolster in -state production of vital 18
medications and personal protective equipment; and 19
(b) To provide a tiered system of[enhanced] incentives for companies [that locate 20
in enhanced incentive counties ] in recognition of the de pressed economic 21
conditions in certain[those] counties and the increased need for the growth 22
and development caused by the depressed economic conditions. 23
(2) To qualify for the incentives provided by subsection (3) of this section, an approved 24
company shall: 25
(a) Incur eligible costs of at least one hundred thousand dollars ($100,000); 26
(b) 1. Create at least ten (10) new full -time jobs and maintain an annual 27
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average number of at least ten (10) new full -time jobs in Tier I or Tier 1
II counties; or 2
2. Create a t least five (5) new full -time jobs and maintain an annual 3
average number of at least five (5) new full -time jobs in enhanced 4
incentive counties; and 5
(c) 1. Pay at least ninety percent (90%) of all new full -time employees whose 6
jobs were created as a resul t of the economic development project a 7
minimum wage of at least one hundred twenty -five percent (125%) of 8
the federal minimum wage in enhanced incentive counties, and one 9
hundred fifty percent (150%) of the federal minimum wage in Tier I or 10
Tier II [other] counties throughout the term of the economic 11
development project; and 12
2. Provide employee benefits for all new full -time jobs equal to at least 13
fifteen percent (15%) of the minimum wage requirement established by 14
subparagraph 1. of this paragraph. If the eligible company does not 15
provide employee benefits equal to at least fift een percent (15%) of the 16
minimum wage requirement established by subparagraph 1. of this 17
paragraph, the eligible company may still qualify for incentives if it 18
provides the full -time employees hired as a result of the economic 19
development project total hou rly compensation equal to or greater than 20
one hundred fifteen percent (115%) of the minimum wage requirement 21
established in subparagraph 1. of this paragraph through increased 22
hourly wages combined with employee benefits; or 23
(d) Produce vital medications, personal protective equipment, or equipment 24
necessary to produce personal protective equipment. 25
(3) The incentives available under this subchapter are as follows: 26
(a) Tax credits of up to one hundred percent (100%) of the Kentucky income tax 27
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imposed under KRS 141.020 or 141.040 and the limited liability entity tax 1
imposed under KRS 141.0401 on the income, Kentucky gross profits, or 2
Kentucky gross receipts of the approved company generated by or arising 3
from the economic development project, as set forth in KRS 141.415 and 4
154.32-070. Tax credits under this section shall be calculated under Section 5
1 of this Act; 6
(b) Authorization for the approved company to impose a wage assessment against 7
the gross wages of each new employee subject to the Kentucky income t ax as 8
provided in KRS 154.32-090; and 9
(c) Notwithstanding any provision of law to the contrary, for any economic 10
development project with an eligible investment of more than two hundred 11
million dollars ($200,000,000), the authority may authorize approval t o the 12
economic development project based upon terms and incentives applicable to 13
economic development project locating in an enhanced incentive county. 14
(4) The General Assembly hereby finds and declares that the authority granted in this 15
subchapter and the purposes accomplished hereby are proper governmental and 16
public purposes for which public moneys may be expended, and that the 17
inducement of the location of economic development projects within the 18
Commonwealth is of paramount importance to the economic w ell-being of the 19
Commonwealth. 20
Section 4. KRS 154.32-040 is amended to read as follows: 21
The authority, upon final approval of a company, may enter into a tax incentive 22
agreement with the approved company. The terms and c onditions of the tax incentive 23
agreement shall be negotiated between the authority and the approved company. The 24
terms of the tax incentive agreement shall include but not be limited to the following 25
provisions: 26
(1) The maximum approved costs that may be r ecovered over the term of the tax 27
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incentive agreement and the annual maximum for approved costs; 1
(2) That the approved company shall provide the authority with all documentation 2
requested in a manner acceptable to the authority; 3
(3) Identification of the c ontribution of the local government to the economic 4
development project, if any; 5
(4) The activation date, which shall be within two (2) years of final approval; 6
(5) That the approved company shall implement the activation date by notifying the 7
authority; 8
(6) That the approved company shall provide documentation satisfactory to the 9
authority within the timeframes required by the authority that it has met the 10
minimum employment, minimum investment, and minimum wage requirements, 11
including employee benefits, established by KRS 154.32-020; 12
(7) That failure of the approved company to meet any of the minimum job, minimum 13
investment, or minimum wage requirements, including employee benefits, 14
established by KRS 154.32-020, on the activation date shall result in cancellation of 15
the tax incentive agreement; 16
(8) The term of the agreement, which shall not exceed fifteen (15) years for an 17
economic development project located in an enhanced incentive county, or ten (10) 18
years for an economic development project located in a Tier I or Tier II [another] 19
county; 20
(9) That, if confirmed approved costs are less than the maximum approved costs 21
included in the tax incentive agreement, the confirmed approved costs shall become 22
the maximum amount that may be recovered by the approved company; 23
(10) If the economic development project is a leased project, that future rent payments 24
that are included in eligible costs shall be included as confirmed approved costs 25
upon submission of a valid lease agreement executed after preliminary approval; 26
(11) Establishment of a job target and minimum wage target, including employee 27
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benefits; 1
(12) A requirement that the job target and minimum wage target, including employee 2
benefits, be measured: 3
(a) On the activation date, against the actual new full -time jobs created and the 4
average wages, including employee benefits, paid for those jobs; and 5
(b) Annually during each year of the agreement, against the annual average of the 6
new full -time jobs and the average wages paid for those jobs, including 7
employee benefits; 8
(13) A provision requiring the approved company to notify the authority immediately if 9
the approved company sells or otherwise transfers or disposes of the land on which 10
an economic development project is located, if a lease relating to the econo mic 11
development project is terminated or lapses, or if the approved company ceases or 12
fundamentally alters operations at the economic development project; 13
(14) A provision detailing the reductions in incentives that will occur pursuant to KRS 14
154.32-030(4) if an approved company fails to meet its job target or minimum wage 15
target, including employee benefits; 16
(15) That the agreement may be assigned by the approved company upon the adoption 17
of a resolution by the authority to that effect; 18
(16) That the approved company shall make available to the authority all of its records 19
pertaining to the economic development project, including but not limited to payroll 20
records, records relating to eligible costs, and any other records pertaining to the 21
economic development project that the authority may require; 22
(17) That the authority may share information with the department f or the purposes of 23
monitoring and enforcing the terms of the tax incentive agreement; 24
(18) That, if an approved company fails to comply with its obligations under the tax 25
incentive agreement other than the jobs target or minimum wage target, the 26
authority may take any or all of the following actions: 27
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(a) Suspend the incentives available to the approved company; 1
(b) Terminate the incentives available to the approved company; or 2
(c) Pursue any other remedy set forth in the tax incentive agreement or to which it 3
may be entitled by law; and 4
(19) Any other provisions not inconsistent with this subchapter and determined to be 5
necessary or appropriate by the parties to the tax incentive agreement. 6
Section 5. KRS 154.32-050 is amended to read as follows: 7
(1) The authority shall identify and certify or decertify the tiers for all [enhanced 8
incentive] counties on an annual basis as provided in this section . The authority 9
shall certify all counties in Kentucky into four (4) tax credit tiers. The incentives 10
available under this subchapter shall be determined based on the county where 11
the economic development project is located by an approved company. 12
(2) Each fiscal year, the authority shall: 13
(a) Obtain from the Department of Workforce Development in the Education and 14
Labor Cabinet, the final unemployment figures for the prior calendar year for 15
each county and for the Commonwealth as a whole; and 16
(b) For each county, identify[ those counties which have had]: 17
1. a. A countywide unemployment rate that exceeds the statewide 18
unemployment rate in the most recent five (5) consecutive 19
calendar years; or 20
b.[2.] An average countywide rate of unemployment exceeding the 21
statewide unemployment rate by two hundred percent (200% ) in 22
the most recent calendar year; and 23
2. The county population ranking pursuant to KRS 154.21-017[ 24
(c) Certify the counties identified in paragraph (b) of this subsection as enhanced 25
incentive counties]. 26
(3) On or before January 1, 2027, and no later tha n January 1 annually thereafter, 27
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the authority shall determine a county's tax credit tier based on the five (5) year 1
average of: 2
(a) A county's unemployment rate; and 3
(b) A county's population ranking pursuant to KRS 154.21-017. 4
The tier rankings shall be effective July 1, 2027, and no later than July 1 5
annually thereafter. 6
(4) The cabinet shall publish tax credit tiers approved under this section annually on 7
January 1 as follows: 8
(a) Tier I shall be the top twenty (20) counties with the highest composite score 9
as calculated pursuant to subsection (3) of this section; 10
(b) Tier II shall be the next twenty (20) counties after Tier I with the highest 11
composite score as calculated pursuant to subsection (3) of this section; 12
(c) Tier III shall be the next forty (40) counties after Tier II with the highest 13
composite score as calculated pursuant to subsection (3) of this section; and 14
(d) Tier IV shall be the next forty (40) counties after Tier III with the highest 15
composite score as calculated pursuant to subsection (3) of this section [A 16
county not certified under subsection (2) of this section may also be certified 17
by the authority as an enhanced incentive county if the authority determines 18
the county is one (1) of the sixty (60) most distressed counties in the 19
Commonwealth based on the following criteria with equal weight given to 20
each criterion: 21
(a) The average countywide rate of unempl oyment in the most recent three (3) 22
consecutive calendar years, using the information obtained under subsection 23
(2)(a) of this section; 24
(b) The percentage of adults twenty -five (25) years of age and older who have 25
attained at least a high school education or equivalent, on the basis of the most 26
recent data available from the United States Department of Commerce, 27
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Bureau of the Census; and 1
(c) The quality of the roads in the county. Quality of roads shall be determined by 2
the access within a county to roads, ranked in descending order from best 3
quality to worst quality, as certified to the authority by the Kentucky 4
Transportation Cabinet as follows: 5
1. Two (2) or more interstate highways; 6
2. One (1) interstate highway; 7
3. A state four (4) lane parkway; 8
4. A four (4) lane principal arterial access to an interstate highway; 9
5. A state two (2) lane parkway; and 10
6. None of the preceding road types]. 11
(5)[(4)] (a) If the authority determines that an enhanced incentive county no longer 12
meets the criteria to be certifi ed as an enhanced incentive county under this 13
section, the authority shall decertify that county. 14
(b) Any economic development project located in an enhanced incentive county 15
that was decertified by the authority after May 1, 2009, shall have until July 1 16
of the third year following the fiscal year in which the county was decertified 17
to obtain final approval from the authority. 18
(6)[(5)] (a) As used in this subsection, "industrial park" means a regional industrial 19
park as defined in KRS 42.4588, or an indust rial park created pursuant to an 20
interlocal agreement in which revenues are shared as provided in KRS 65.210 21
to 65.300. 22
(b) An economic development project undertaken in an industrial park that is 23
located in two (2) or more counties, one (1) of which is an enhanced incentive 24
county, may be approved for the enhanced incentive county incentives set 25
forth in this subchapter. 26
(7)[(6)] On or before July 1, 2028, and no later than July 1 every two (2) years 27
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thereafter, the cabinet shall report to the Legislative Research Commission for 1
referral to the Interim Joint Committee on Appropriations and Revenue the 2
following information for each county: 3
(a) The county name; 4
(b) The tier ranking for that county; 5
(c) The five (5) year average unemployment rate; and 6
(d) The five (5) year average county population ranking [A county not certified 7
under subsection (2) or (3) of this section may be certified by the authority as 8
an enhanced incentive county if the county has been declared a disaster relief 9
area by any state or fed eral agency on or after December 1, 2021. The 10
enhanced county certification shall be effective for a period of two (2) years 11
from the date of certification by the authority. Following the two (2) year 12
period, if a county certified under this subsection doe s not meet the criteria 13
under subsections (2) and (3) of this section to be certified as an enhanced 14
incentive county, the county shall be decertified in accordance with 15
subsection (4) of this section]. 16
Section 6. KRS 154.32-090 is amended to read as follows: 17
(1) An approved company or, with the authority's consent, an affiliate of an approved 18
company may impose wage assessments against employees as provided in this 19
section if a wage assessment is included in the incentiv es awarded to the approved 20
company in the tax incentive agreement. The level of wage assessment shall be 21
negotiated as part of the tax incentive agreement. 22
(2) If an economic development project is located in an enhanced incentive county, the 23
approved comp any or, with the authority's consent, an affiliate of the approved 24
company may require that each employee subject to the tax imposed by KRS 25
141.020, whose job is determined by the authority to be created as a result of the 26
economic development project, as a condition of employment, agree to an 27
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assessment of up to one hundred percent (100%) of the individual income tax rate 1
imposed by KRS 141.020, and that assessment shall operate as the 2
Commonwealth's wage assessment. Although not required for an economic 3
development project located in an enhanced incentive county, a local jurisdiction 4
may agree to forgo all or a portion of its local occupational license fee as a local 5
wage assessment. 6
(3) (a) If the economic development project is located in a Tier I or Tie r II [not 7
located in an enhanced incentive] county, and is located in a local jurisdiction 8
where: 9
1. No local occupational license fee is imposed; 10
2. a. A local occupational license fee greater than or equal to twenty 11
percent (20%) of the individual income tax rate in KRS 141.020 is 12
imposed; and 13
b. The local jurisdiction agrees to forgo, as the local wage 14
assessment, at least twenty percent (20%) of the individual income 15
tax rate imposed by KRS 141.020 via credits against the local 16
occupational license fee for the affected employees; or 17
3. a. A local occupational license fee less than twenty percent (20%) of 18
the individual income tax rate in KRS 141.020 is imposed; and 19
b. The local jurisdiction agrees to forgo the total amount of the local 20
occupational license fee as the local wage assessment; then 21
(b) An approved company or, with the authority's consent, an affiliate of an 22
approved company may require that each employee subject to tax imposed by 23
KRS 141.020, whose job is determined by the authority to be created as a 24
result of the economic development project, as a condition of employment, 25
agree to pay an assessment of up to sixty percent (60%) of the individual 26
income tax rate imposed by KRS 141.020 and that assessment shall operate as 27
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the Commonwealth's wage assessment. 1
(4) (a) If the economic develo pment project is located in a Tier I or Tier II [not 2
located in an enhanced incentive] county, and is located in a local jurisdiction 3
where: 4
1. a. A local occupational license fee greater than or equal to twenty 5
percent (20%) of the individual income tax r ate in KRS 141.020 is 6
imposed; and 7
b. The local jurisdiction agrees to forgo an amount of the local 8
occupational license fee that is less than twenty percent (20%) of 9
the individual income tax rate in KRS 141.020 as the local wage 10
assessment; or 11
2. a. A lo cal occupational license fee of lesser than twenty percent 12
(20%) of the individual income tax rate in KRS 141.020 is 13
imposed; and 14
b. The local jurisdiction agrees to forgo only a portion of the total 15
amount of the local occupational license fee as the loca l wage 16
assessment; then 17
(b) An approved company or, with the authority's consent, an affiliate of an 18
approved company may require that each employee subject to tax imposed by 19
KRS 141.020, whose job is determined by the authority to be created as a 20
result o f the economic development project, as a condition of employment, 21
agree to pay an assessment equal to three (3) times the forgone local wage 22
assessment rate and that assessment shall operate as the Commonwealth's 23
wage assessment. 24
(5) If the project is not located in an enhanced incentive county, and: 25
(a) Is located in a local jurisdiction that does not impose a local occupational 26
license fee, the local jurisdiction shall be required to provide some alternative 27
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inducement satisfactory to the authority at the local level in order for a 1
preliminarily approved company to receive final approval. However, the 2
authority may waive this requirement if there are reasonable circumstances 3
that prevent the local jurisdiction from providing a reasonable inducement; or 4
(b) Is located in a local jurisdiction that does impose a local occupational license 5
fee, the jurisdiction may request that the authority waive the local 6
occupational license fee requirements established by subsection (3) or (4) of 7
this section if the local j urisdiction offers alternative inducements of similar 8
value satisfactory to the authority. The authority shall review all requests for a 9
waiver, and may waive the local occupational license fee requirements and 10
instead require the local jurisdiction to pro vide alternative inducements of 11
similar value if the authority determines that the circumstances warrant an 12
alternative contribution by the local jurisdiction. 13
(6) Each employee paying the assessment shall simultaneously be entitled to a credit 14
against the Kentucky individual income tax required to be withheld under KRS 15
141.310 equal to the state portion of the assessment and shall be entitled to a credit 16
against the local occupational license tax equal to the local portion of the 17
assessment. 18
(7) If more than one (1) local jurisdiction imposes an occupational license fee, the local 19
jurisdiction portion of the assessment shall be prorated proportionately among the 20
taxes imposed by the local jurisdictions unless one (1) local jurisdiction agrees to 21
forgo the receipt of these taxes in an amount equal to the local jurisdiction portion 22
of the wage assessment, in which case no proration shall be made. 23
(8) If a full -time employee subject to state tax imposed by KRS 141.020 is already 24
employed by the approved company at a site other than the site of the economic 25
development project, that full -time employee's job shall be deemed to have been 26
created when the full -time employee is transferred to the site of the economic 27
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development project if the full -time employee's ex isting job is filled with a new 1
full-time employee. 2
(9) If an approved company elects to impose the assessment as a condition of 3
employment, it shall be authorized to deduct the assessment from each payment of 4
wages to the employee. 5
(10) Notwithstanding an y other provision of the Kentucky Revised Statutes, if an 6
approved company elects not to deduct the assessment from each payment of wages 7
to the employee, but rather requests a reimbursement of state tax imposed by KRS 8
141.020 or local occupational tax in the aggregate after they have been paid to the 9
state or local jurisdiction, no interest shall be paid by the state or by the local 10
jurisdiction on that reimbursement. 11
(11) No credit, or portion thereof, shall be allowed against any occupational license fee 12
imposed by or dedicated solely to the board of education in a local jurisdiction. 13
(12) An approved company imposing an assessment shall make its payroll, books, and 14
records available to the authority or the department upon request, and shall file with 15
the authority or department documentation pertaining to the assessment as the 16
authority or department may require. 17
(13) Any assessment of the wages of employees of an approved company in connection 18
with their employment at an economic development project shall permanently cease 19
at the expiration of the tax incentive agreement. 20
Section 7. KRS 154.61-010 is amended to read as follows: 21
As used in this subchapter: 22
(1) "Above-the-line production crew" means employees involved wit h the production 23
of a motion picture or entertainment production whose salaries are negotiated prior 24
to commencement of production, such as actors, directors, producers, and writers; 25
(2) "Animated production" means a nationally distributed feature -length film created 26
with the rapid display of a sequence of images using 2 -D or 3 -D graphics of 27
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artwork or model positions in order to create an illusion of movement; 1
(3) "Approved company" means an eligible company approved for incentives provided 2
under KRS 141.383 and 154.61-020; 3
(4) "Below-the-line production crew" means employees involved with the production 4
of a motion picture or entertainment production except above -the-line production 5
crew. "Below-the-line production crew" includes but is not limited to: 6
(a) Casting assistants; 7
(b) Costume design; 8
(c) Extras; 9
(d) Gaffers; 10
(e) Grips; 11
(f) Location managers; 12
(g) Production assistants; 13
(h) Set construction staff; and 14
(i) Set design staff; 15
(5) "Cabinet" means the Cabinet for Economic Development; 16
(6) "Commonwealth" means the Commonwealth of Kentucky; 17
(7) "Compensation" means compensation included in adjusted gross income as defined 18
in KRS 141.010; 19
(8) "Continuous film production" means a motion pi cture or entertainment production 20
that: 21
(a) 1. Has a projected budget of a minimum of ten million dollars 22
($10,000,000) per calendar year for qualifying expenditures and 23
qualifying payroll expenditures allocated to all qualifying motion picture 24
or entertainment productions to be filmed or produced in Kentucky, with 25
a minimum of one million five hundred thousand dollars ($1,500,000) 26
per production in Kentucky; and 27
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2. Has a minimum of fifty percent (50%) of the funds available and the 1
ability to raise the rem aining funds necessary to complete the filming 2
and production, which may be verified by: 3
a. Bank statements or other financial documents; or 4
b. A fundraising plan at the request of the council; 5
(b) Demonstrates a distribution contract for each motion or en tertainment 6
production; 7
(c) Films and produces a minimum of twelve (12) or more days per production 8
within the Commonwealth; and 9
(d) Maintains: 10
1. An apprenticeship program or on -the-job training program as defined in 11
KRS 343.010; or 12
2. Partners with a fil m studies program with an accredited institution of 13
postsecondary education located in the Commonwealth; 14
(9) "Council" means the Kentucky Film Leadership Council created in KRS 154.12 -15
282; 16
(10) "Documentary" means a production based upon factual information and not 17
subjective interjections; 18
(11) "Eligible company" means any person that intends to film or produce a moti on 19
picture or entertainment production in the Commonwealth; 20
(12) "Employee" has the same meaning as in KRS 141.010, and, for purposes of this 21
subchapter, also may include the employees or independent contractors of an 22
approved company or the employees of a loan-out entity engaged by an approved 23
company if they meet the requirements of KRS 141.310; 24
(13) "Enhanced incentive county" has the same meaning as in KRS 154.32-010; 25
(14) "Feature-length film" means a live-action or animated production that is: 26
(a) More than thirty (30) minutes in length; and 27
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(b) Produced for distribution in theaters or via digital format, including but not 1
limited to DVD, Internet, or mobile electronic devices; 2
(15) "Industrial film" means a business -to-business film that may be viewed by the 3
public, including but not limited to videos used for training or for viewing at a trade 4
show; 5
(16) "Kentucky-based company" has the same meaning as in KRS 164.6011; 6
(17) "Loan-out entity" means a corporation, partnership, limited liability company, or 7
other entity through which an artist or other person is loaned out to perform services 8
for the approved company. A loan -out entity shall be registered and in good 9
standing with the Kentucky Secretary of State. Notwithstanding the business 10
organization, the loan-out entity and all employees of and other persons performing 11
services for the loan -out entity shall be subject to all applicable provisions of the 12
Kentucky personal income tax and any applicable payroll or other tax provisions; 13
(18) (a) "Motion picture or entertainment production" means: 14
1. The following if filmed in whole or in part, or produced in whole or in 15
part, in the Commonwealth: 16
a. A feature-length film; 17
b. A television program; 18
c. An industrial film; or 19
d. A documentary; or 20
2. A national touring production of a Broadway show produced in 21
Kentucky. 22
(b) "Motion picture or entertainment production" does not include the filming or 23
production of obscene material or television coverage of news or athletic 24
events; 25
(19) "Obscene" has the same meaning as in KRS 531.010; 26
(20) "Person" has the same meaning as in KRS 141.010; 27
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(21) (a) "Qualifying expenditure" means expenditures made in the Commonwealth for 1
the following if directly used in or for a motion picture or entertainment 2
production: 3
1. The production script and synopsis; 4
2. Set construction and operations, wardrobe, accessories, and related 5
services; 6
3. Lease or rental of real property in Kentucky as a set location; 7
4. Photography, sound synchronization, lighting, and related services; 8
5. Editing and related services; 9
6. Rental of facilities and equipment; 10
7. Vehicle leases; 11
8. Food; and 12
9. Accommodations. 13
(b) "Qualifying expenditure" does not include Kentucky sales and use tax paid by 14
the approved company on the qualifying expenditure; 15
(22) "Qualifying payroll expenditure" means compensation paid to above -the-line crew 16
and below -the line crew while working on a motion picture or entertainment 17
production in the Commonweal th if the compensation is for services performed in 18
the Commonwealth; 19
(23) "Resident" has the same meaning as in KRS 141.010; 20
(24) "Secretary" means the secretary of the Cabinet for Economic Development; 21
(25) "Tax incentive agreement" means the agreement e ntered into pursuant to KRS 22
154.61-030 between the council and the approved company;[ and] 23
(26) "Television program" means any live -action or animated production or 24
documentary, including but not limited to: 25
(a) An episodic series; 26
(b) A miniseries; 27
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(c) A television movie; or 1
(d) A television pilot; 2
that is produced for distribution on television via broadcast, cable, or any digital 3
format, including but not limited to cable, satellite, internet, or mobile electronic 4
devices; and 5
(27) "Tier" means the sort ing of all Kentucky counties into quartiles based on each 6
county's unemployment rate and population ranking pursuant to Section 5 of this 7
Act. 8
Section 8. KRS 154.61-020 is amended to read as follows: 9
(1) The purposes of KRS 141.383 and this subchapter are to encourage: 10
(a) The film and entertainment industry to choose locations in the 11
Commonwealth for the filming and production of motion picture or 12
entertainment productions; 13
(b) The development of a film and entertainment industry in Kentucky; 14
(c) Increased employment opportunities for the citizens of the Commonwealth 15
within the film and entertainment industry; and 16
(d) The development of a production and postproduction infrastructure in the 17
Commonwealth for film production and touring Broadway show production 18
facilities containing state-of-the-art technologies. 19
(2) The council, together with the Department of Revenue, shall administer the tax 20
credit established by KRS 141.383, this section, and KRS 154.61-030. 21
(3) To qualify for the tax incentive provided in subsection (5) of this section, the 22
following requirements shall be met: 23
(a) For an approved company that is also a Kentucky-based company that: 24
1. Films or produces a feature-length film, television program, or industrial 25
film in whole or in part in the Commonwealth, the minimum combined 26
total of qualifying expenditures and qualif ying payroll expenditures 27
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shall be one hundred twenty-five thousand dollars ($125,000); 1
2. Produces a national touring production of a Broadway show in whole or 2
in part in the Commonwealth, the minimum combined total of 3
qualifying expenditures and qualifyi ng payroll expenditures shall be 4
twenty thousand dollars ($20,000); or 5
3. Films or produces a documentary in whole or in part in the 6
Commonwealth, the minimum combined total of qualifying 7
expenditures and qualifying payroll expenditures shall be ten thousa nd 8
dollars ($10,000); and 9
(b) For an approved company that is not a Kentucky-based company that: 10
1. Films or produces a feature-length film, television program, or industrial 11
film in whole or in part in the Commonwealth, the minimum combined 12
total of quali fying expenditures and qualifying payroll expenditures 13
shall be two hundred fifty thousand dollars ($250,000); or 14
2. Films or produces a documentary in whole or in part in the 15
Commonwealth or that produces a national touring production of a 16
Broadway show, the minimum combined total of qualifying 17
expenditures and qualifying payroll expenditures shall be twenty 18
thousand dollars ($20,000). 19
(4) (a) Beginning on January 1, 2022, the total tax incentive approved under KRS 20
141.383 and this subchapter shall be limi ted to seventy -five million dollars 21
($75,000,000) for calendar year 2022 and each calendar year thereafter. 22
(b) Beginning with calendar year 2024: 23
1. Twenty-five million dollars ($25,000,000) shall be allocated for all 24
approved companies with a continuous film production; and 25
2. On the first day of July of each calendar year, any unused balance of the 26
amount allocated under subparagraph 1. of this paragraph for continuous 27
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film productions shall be made available for all approved companies 1
with motion picture or entertainment productions. 2
(5) (a) To qualify for the tax incentive available under KRS 141.383 and this 3
subchapter all applicants shall: 4
1. Begin filming or production in Kentucky within six (6) months of 5
approval by the council; and 6
2. Complete filming or production in Kentucky within two (2) years of the 7
filming or production start date. 8
(b) The tax credit shall be against the Kentucky income tax imposed under KRS 9
141.020 or 141.040, and the limited liability entity tax imposed under KRS 10
141.0401, and shall be refundable as provided in KRS 141.383. 11
(c) 1. For a motion picture or entertainment production or continuous film 12
production filmed or produced in its entirety in an enhanced incentive 13
county, the amount of the incentive shall be equal to thirt y-five percent 14
(35%) of the approved company's: 15
a. Qualifying expenditures; 16
b. Qualifying payroll expenditures paid to resident and nonresident 17
below-the-line production crew; and 18
c. Qualifying payroll expenditures paid to resident and nonresident 19
above-the-line production crew not to exceed one million dollars 20
($1,000,000) in payroll expenditures per employee. 21
2. a. To the extent the approved company films or produces a motion 22
picture or entertainment production or continuous film production 23
in part in an enhanced incentive county and in part a Tier I or Tier 24
II Kentucky county[ that is not an enhanced incentive county] , the 25
approved company shall be eligible to receive the incentives 26
provided in this paragraph for those expenditures incurred in the 27
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enhanced incentive county and all other expenditures shall be 1
subject to the incentives provided in paragraph (d) of this 2
subsection. 3
b. The approved company shall track the requisite expenditures by 4
county. If the approved company can demonstrate to the 5
satisfaction of the cabinet that it is not practical to use a separate 6
accounting method to determine the expenditures by county, the 7
approved company shall determine the correct expenditures by 8
county using an alternative method approved by the cabinet. 9
(d) For a motion picture or entertainment production or continuous film 10
production filmed or produced in whole or in part in any Tier I or Tier II 11
Kentucky county[ other than in an enhanced incentive county] , the amount of 12
the incentive shall be equal to: 13
1. Thirty percent (30%) of the approved company's: 14
a. Qualifying expenditures; 15
b. Qualifying payroll expenditures paid to below -the-line production 16
crew that are not residents; and 17
c. Qualifying payroll expenditures paid to above -the-line production 18
crew that are not residents, not to exceed one million dollars 19
($1,000,000) in payroll expenditures per employee; and 20
2. Thirty-five percent (35%) of the approved company's: 21
a. Qualifying payroll expenditures paid to resident below -the-line 22
production crew; and 23
b. Qualifying payroll expenditures paid to resident above -the-line 24
production crew not to exceed one million dollars ($1,000,000) in 25
payroll expenditures per employee. 26
Section 9. KRS 141.383 is amended to read as follows: 27
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(1) As used in this section: 1
(a) "Above-the-line production crew" has the same m eaning as in KRS 154.61 -2
010; 3
(b) "Approved company" has the same meaning as in KRS 154.61-010; 4
(c) "Below-the-line production crew" has the same meaning as in KRS 154.61 -5
010; 6
(d) "Continuous film production" has the same meaning as in KRS 154.61-010; 7
(e) "Council" means the Kentucky Film Leadership Council created in KRS 8
154.12-282; 9
(f) "Loan-out entity" has the same meaning as in KRS 154.61-010; 10
(g) "Qualifying expenditure" has the same meaning as in KRS 154.61-010; 11
(h) "Qualifying payroll expenditure" has the same meaning as in KRS 154.61 -12
010; 13
(i) "Secretary" has the same meaning as in KRS 154.61-010; and 14
(j) "Tax incentive agreement" has the same meaning as KRS 154.61-010. 15
(2) (a) There is hereby created a tax credit against the tax imposed under KRS 16
141.020 or 141.040 and 141.0401, with the ordering of credits as provided in 17
KRS 141.0205. 18
(b) The incentive available under paragraph (a) of this section is: 19
1. A refundable credit for applications approved prior to April 27, 2018; 20
2. A nonrefundable and nontransferable credit for applications approved on 21
or after April 27, 2018, but before January 1, 2022; and 22
3. A refundable credit for applications approved on or after January 1, 23
2022, if the provisions of paragraph (c) of this subsection are met. 24
(c) 1. The total tax incentive approved under KRS 154.61 -020 shall be limited 25
to: 26
a. One hundred million dollars ($100,000,000) for calendar year 27
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2018 and each calendar year through the calendar year 2021; 1
b. Seventy-five million dollars ($75,000,000) for the calendar year 2
2022 and each calendar year thereafter; and 3
c. Beginning with calen dar year 2024, the amount in subdivision b. 4
of this subparagraph shall be allocated accordingly: 5
i. Twenty-five million dollars ($25,000,000) shall be allocated 6
for all approved companies with a continuous film 7
production; and 8
ii. On the first day of April 2025, and on April 1 of each 9
calendar year thereafter, any unused balance allocated under 10
subpart i. of this subdivision for continuous film productions 11
shall be made available for all approved companies with a 12
motion picture or entertainment production. 13
2. To qualify for the refundable credit, all applicants shall: 14
a. Begin filming or production in Kentucky within six (6) months of 15
approval by the council; and 16
b. Complete filming or production in Kentucky within two (2) years 17
of their production start date. 18
(3) An approved company may receive a refundable tax credit if: 19
(a) The department has received notification from the council that the approved 20
company has satisfied all requirements of KRS 154.61 -020 and 154.61 -030; 21
and 22
(b) The approved company has pro vided a detailed cost report and sufficient 23
documentation to the council, which has been forwarded by the council to the 24
department, that: 25
1. The purchases of qualifying expenditures were made after the execution 26
of the tax incentive agreement; and 27
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2. The approved company or loan -out entity has withheld income tax as 1
required by KRS 141.310 on all qualified payroll expenditures, and 2
remitted and certified the withheld amount to the department. 3
(4) Interest shall not be allowed or paid on any refundable cred its provided under this 4
section. 5
(5) The department may promulgate administrative regulations under KRS Chapter 6
13A to administer this section. 7
(6) On or before September 1, 2010, and on or before each September 1 thereafter, for 8
the immediately preceding fiscal year, the department shall report to the council and 9
the Interim Joint Committee on Appropriations and Revenue the names of the 10
approved companies and the amounts of refundable income tax credit claimed. 11
(7) No later than September 1, 2021, and by N ovember 1 every four (4) years 12
thereafter, the department and the Cabinet for Economic Development shall 13
cooperatively provide historical data related to the tax credit allowed in this section 14
and KRS 154.61 -020 and 154.61 -030, including data items beginni ng with tax 15
credits claimed for taxable years beginning on or after January 1, 2018: 16
(a) The name of the taxpayer claiming the tax credit; 17
(b) The date that the application was approved and the date the filming or 18
production was completed; 19
(c) The taxable year in which the taxpayer claimed the tax credit; 20
(d) The total amount of the tax credit, including any amount denied, any amount 21
applied against a tax liability, any amount refunded, and any amount 22
remaining that may be claimed on a return filed in the future; 23
(e) Whether the taxpayer is a Kentucky -based company as defined in KRS 24
154.61-010; 25
(f) Whether the taxpayer films or produces a: 26
1. Feature-length film, television program, or industrial film; 27
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2. National touring production of a Broadway show; or 1
3. Documentary; 2
(g) Whether the filming or production was performed: 3
1. Entirely in an enhanced county; or 4
2. In whole or in part in any Tier I or Tier II Kentucky county[ other than 5
in an enhanced incentive county]; 6
(h) The amount of qualifying expenditures incurred by the taxpayer; 7
(i) The amount of qualifying payroll expenditures paid to: 8
1. Resident below-the-line crew; and 9
2. Nonresident below-the-line production crew; 10
including the number of crew members in each category; 11
(j) The amount of qualifying payroll expenditures paid to: 12
1. Resident above-the-line crew; and 13
2. Nonresident above-the-line crew; 14
including the number of crew members in each category; and 15
(k) A brief description of the type of motion picture or entertainment production 16
project. 17
(8) The information required to be reported under this section shall not be considered 18
confidential taxpayer information and shall not be subject to KRS Chapter 131 or 19
any other provisions of the Kentucky Revised Statutes prohibiting disclosure or 20
reporting of information. 21