Title 32: Taxation and Finance
Chapter 151: INCOME TAXES
Sub-Chapter 011E: Economic Advancement Tax Incentives
32 V.S.A. § 5930h. Carry-forward, carry-back, and recapture for substantial curtailment of trade or business
[Section 5930h repealed effective January 1, 2017; see note set out below.]§ 5930h. Carry-forward, carry-back, and recapture for substantial curtailment of trade or business
(a) Carry-forward. A credit not otherwise useable in the year earned may be carried forward to any subsequent year for which an approval exists, or to any of the next five succeeding years following the last year of the term approved by the Council for the receipt of incentives.
(b) Carry-back. Carry-backs are not allowed for the economic incentives under this subchapter.
(c) Recapture amounts.
(1) In the event that a person has substantially curtailed its trade or business, then for any such year and all succeeding years, any unused economic incentives, including any amount of economic incentive carried forward, shall be disallowed, and any economic incentives used shall be recaptured in an amount equal to a percentage of the total economic incentive used, computed in accordance with the following table:
Years between close of tax year Percent of economic when economic incentive was incentives recaptured earned and year when business became ineligible Two or less 100% More than 2, up to 4 50% More than 4, up to 6 25%
(2) The recapture shall be reported on the income tax return of the taxpayer claiming the incentive for the tax year in which the 120 consecutive-day threshold occurred.
(d) Curtailment of trade or business. A person who has obtained an economic incentive under this subchapter shall file with the Council and the Commissioner of Taxes each year until the sixth year following the last year for which an incentive was authorized a statement of the average number of full-time employees during that year and the lowest number of full-time employees for any 120-consecutive-day period ending during that year. As used in this section, "full-time employee" means an employee who works no less than 37 hours each week. A person shall be deemed to have substantially curtailed its trade or business if the average number of full-time employees in any period of 120 consecutive days is less than 75 percent of the highest average number of full-time employees for any year in a period of six years after the initial authorization of an incentive by the Council.
(e) Notifications; hearing; written determination. A person that has obtained an economic incentive shall notify the Council in writing within 60 days of a substantial curtailment of its trade or business. The Council shall notify the Commissioner of Taxes of a substantial curtailment of trade or business and the amount of economic incentive authorized to the person required to report under this subsection. The Council shall provide the taxpayer and the Commissioner of Taxes with a written determination of the amount of the economic incentive that shall be recaptured or disallowed as computed according to the table in subdivision (c)(1) of this section.
(f) Deferral and mitigation of disallowance and recapture. Within 90 days of receipt of written determination of recapture or disallowance under subsection (e) of this section, a person may apply to the Council for a deferral of the disallowance or recapture for a nonrenewable period of 36 months.
(1) The deferral may be granted by the Council upon its determination that there is a reasonable likelihood that the trade or business will restore its employment level above the minimum recapture level within the deferral period.
(2) Mitigation of disallowance or recapture may be granted or denied by the Council in accordance with the following:
(A) If the taxpayer restores its employment level above the minimum recapture level, the Council shall waive disallowance and recapture.
(B) If the taxpayer fails to restore its employment level to eliminate the substantial curtailment by the end of the deferral period and has failed to substantially complete all other goals upon which the incentive was based, any unused economic incentives shall be disallowed, and the amount of recapture shall be the amount as determined under subsection (c) of this section.
(C) If the taxpayer fails to restore its employment level to eliminate the substantial curtailment by the end of the deferral period but has substantially completed all other goals upon which the incentive was based, the Council shall recalculate the costs and benefits of the taxpayer's actual job creation and performance related to the factors upon which the award was based. The Council shall then determine and recommend to the Commissioner of Taxes a mitigated amount of disallowance or recapture based on the difference between the amount of credits already applied by the taxpayer and the amount of credits that is otherwise determined through the recalculation of the taxpayer's actual performance under the cost-benefit model. (Added 1997, No. 71 (Adj. Sess.), § 48, eff. March 11, 1998; amended 1999, No. 159 (Adj. Sess.), § 14; 2003, No. 67, § 21; 2005, No. 184 (Adj. Sess.), § 8, eff. May 24, 2006.)