Business And Job Development Credit
Business And Job Development Credit
The purpose of the business and job development credit is to provide tax incentives throughout the state which encourage businesses to create new jobs through capital investment projects involving the building of new facilities or the expansion or renovation of existing facilities. There are two different acts within the Kansas statutes which provide an income tax credit for those businesses which make an investment and create jobs as a result of that investment. The acts are the Job Expansion and Investment Credit Act of 1976 and the Kansas Enterprise Zone Act.
JOB EXPANSION
AND INVESTMENT CREDIT ACT OF 1976
(INCOME TAXPAYER)
Effective for all taxable years beginning after
December 31, 1975.
QUALIFICATIONS
The business and job development credit is allowed as a direct tax
credit against the income tax of any Kansas taxpayer if:
- an investment in a qualified business facility is made, and;
- at least two qualified business facility employees are hired as a direct result of that investment.
There is no minimum amount of investment necessary to qualify for the credit, however, some investment must have been made. The taxpayer must qualify for the credit during the first taxable year that operations occur at the qualified business facility investment.
CREDIT AMOUNT
For an investment that began operations after December 31, 1992,
the credit amounts are as follows:
Employee - $100 for each qualified employee
Investment - $100 for each $100,000 of
qualified investment
For an investment that began operations prior to
December 31, 1992, the credit amounts are as follows:
Investment is located in an enterprise
zone:
Employee
Kansas resident - $350 for each qualified employee
$500 for each qualified targeted employee as defined
in the Internal Revenue Code
Kansas nonresident - $100 for each qualified employee
Investment - $350 for each $100,000 of qualified investment
Investment is not located in an
enterprise zone:
Employee - $100 for each qualified employee
Investment - $100 for each $100,000 of
qualified investment
LIMITATION OF CREDIT
The credit is limited to 50% of the tax on the qualified
business facility income for the tax year, but in no case can
the credit from all qualified investment and employees be more than
50% of the Kansas income tax in any one tax year.
The credit is recomputed each year for a 10 year period and no carryover of unused credit is allowed.
PROCEDURES TO CLAIM THE CREDIT
You may download Schedule K-34 and
the Instructions for Investments that Began Operations in Tax Years
Commencing on or after January 1, 1993 to claim the business
and job development credit under the Job Expansion and Investment
Credit Act of 1976. Schedule K-34 must be completed and submitted
with the individual or corporate income tax return. You may also
call the Department of Revenue voice mail system at (785) 296-4937
to request Schedule K-34 and the appropriate instructions. You will
be asked to give your name, address, phone number and form(s) you
desire. Please allow two weeks for delivery of your forms.
JOB EXPANSION AND INVESTMENT CREDIT ACT OF 1976
(PRIVILEGE TAXPAYER)
Effective for all taxable years beginning after
December 31, 1995.
QUALIFICATIONS
The business and job development credit is allowed as a direct tax
credit against the privilege tax of banks and savings and loan institutions
if:
- an investment in a qualified business facility is made, and;
- at least two qualified business facility employees are hired as a direct result of that investment.
There is no minimum amount of investment necessary to qualify for the credit, however, some investment must have been made. The taxpayer must qualify for the credit during the first taxable year that operations occur at the qualified business facility investment.
The business and job credit development credit is available for investments which began operations after December 31, 1995.
There is no tax credit available under the Job Expansion and Investment Credit Act of 1976 for any investments that began operations prior to january 1, 1996.
CREDIT AMOUNT
For an investment that began operations after December 31, 1995,
the credit amounts are as follows:
Employee - $100 for each qualified employee
Investment - $100 for each $100,000 of
qualified investment
LIMITATION OF CREDIT
The credit is limited to 50% of the tax on the qualified
business facility income for the tax year, but in no case can
the credit from all qualified investment and employees be more than
50% of the Kansas privilege tax in any one tax year.
The credit is recomputed each year for a 10 year period and no carryover of unused credit is allowed.
PROCEDURES TO CLAIM THE CREDIT
You may download Schedule K-34 and
the Instructions for Investments that Began Operations in Tax Years
Commencing on or after January 1, 1993 to claim the business
and job development credit under the Job Expansion and Investment
Credit Act of 1976. Schedule K-34 must be completed and submitted
with the privilege tax return. You may also call the Department
of Revenue voice mail system at (785) 296-4937 to request Schedule
K-34 and the appropriate instructions. You will be asked to give
your name, address, phone number and form(s) you desire. Please
allow two weeks for delivery of your forms.
KANSAS
ENTERPRISE ZONE ACT
(INCOME TAXPAYER)
Effective for all taxable years beginning after December 31, 1992.
QUALIFICATIONS
An enhanced business and job development credit is allowed as a
direct tax credit against the income tax of any Kansas taxpayer
when:
- an investment in a qualified business facility is made, and;
- the business meets the definition of:
- nonmanufacturing; or
- retail, and
- a specified minimum number of qualified business facility employees are hired as a direct result of that investment.
-
manufacturing;
There is no minimum amount of investment necessary to qualify for the credit, however, some investment must have been made. The taxpayer must qualify for the credit during the first taxable year that operations occur at the qualified business facility investment.
The enhanced business and job development credit is available for investments which began operations after December 31, 1992.
There is no enhanced income tax credit available under the Kansas Enterprise Zone Act for any investments that began operations prior to January 1, 1993.
MANUFACTURING
A manufacturing business must hire at least two qualified business
facility employees as a direct result of the investment to qualify
for the credit.
CREDIT AMOUNT
Located in a Kansas metropolitan county or any
other area not designated as a nonmetropolitan region
Employee - $1,500 for each
qualified employee
Investment - $1,000 for each $100,000
of qualified investment
Located in a Kansas nonmetropolitan region
Employee - $2,500 for each
qualified employee
Investment - $1,000 for each $100,000
of qualified investment
LIMITATION OF CREDIT
The credit from all qualified investment and employees is limited
to 50% of the Kansas income tax in any one tax year. For investments
which began operations after January 1, 1996, the limitation is
100% of the Kansas income tax for the tax year in which the credit
is claimed.
The credit is computed once and the remainder of the credit is carried forward until used as long as the taxpayer maintains the minimum number of qualified employees.
NONMANUFACTURING
A nonmanufacturing business must hire at least five qualified business
facility employees as a direct result of the investment to qualify
for the credit.
CREDIT AMOUNT
Located in a Kansas metropolitan county or any
other region not designated as a nonmetropolitan region
Employee - $1,500 for each qualified employee
Investment - $1,000 for each $100,000
of qualified investment
Located in a Kansas nonmetropolitan region
Employee - $2,500 for each qualified employee
Investment - $1,000 for each $100,000
of qualified investment
LIMITATION OF CREDIT
The credit from all qualified investment and employees is limited
to 50% of the Kansas income tax in any one tax year. For investments
which began operations after January 1, 1996, the limitation is
100% of the Kansas income tax for the tax year in which the credit
is claimed.
The credit is computed once and the remainder of the credit is carried forward until used as long as the taxpayer maintains the minimum number of qualified employees.
RETAIL
A retail business may qualify for the enhanced tax credit under
the Kansas Enterprise Zone Act if the business is considered as:
- the business headquarters of a retail operation;
- an ancillary support operation of a retail business;
- Catalog and Mail-Order Houses identified under the Standard Industrial Classification code of 5961; or
- Prepackaged Software identified under the Standard Industrial Classification code of 7372.
To qualify for the enhanced income tax credit, a business headquarters must hire at least 20 qualified business facility employees as a direct result of the investment and must have begun operations after December 31, 1992.
Effective for all taxable years commencing after December 31, 1995, an ancillary support operation of a retail business or those establishments designated with a SIC code of 5961 or 7372 shall also qualify for the enhanced income tax credit if at least 20 qualified business facility employees are hired as a direct result of investment made.
If the retail business is not considered as the business headquarters, ancillary support, or is not identified under the Standard Industrial Classification code of 5961 or 7372, the retail business may claim the business and job development credit under the Job Expansion and Investment Credit Act of 1976. The retail business must hire two qualified business facility employees as a direct result of the investment to qualify for the credit.
CREDIT AMOUNT
Located in a Kansas metropolitan county or any
other area not designated as a nonmetropolitan region
Employee - $1,500 for each
qualified employee
Investment - $1,000 for each $100,000
of qualified investment
Located in a Kansas nonmetropolitan
region
Employee - $2,500 for each qualified employee
Investment - $1,000 for each $100,000
of qualified investment
LIMITATION OF CREDIT
The credit is limited to 50% of the Kansas income tax. For those
investments which began operations commencing on or after January
1, 1996, the limitation is 100% of the Kansas income tax for the
tax year in which the credit is claimed.
The credit is computed once and the remainder of the credit is carried forward until used as long as the taxpayer maintains the minimum number of qualified employees.
PROCEDURES TO CLAIM THE CREDIT
You may download Schedule K-34 and
the Instructions for Investments that Began Operations in Tax Years
Commencing on or after January 1, 1993 to claim the business
and job development credit under the Kansas Enterprise Zone Act.
Schedule K-34 must be completed and submitted with the individual
or corporate income tax return. You may also call the Department
of Revenue voice mail system at (785) 296-4937 to request Schedule
K-34 and the appropriate instructions. You will be asked to give
your name, address, phone number and form(s) you desire. Please
allow two weeks for delivery of your forms.
KANSAS
ENTERPRISE ZONE ACT
(PRIVILEGE TAXPAYER)
Effective for all taxable years beginning after December 31, 1992.
QUALIFICATIONS
An enhanced business and job development credit is allowed as a
direct tax credit against the privilege tax of banks and savings
and loan institutions if:
- an investment in a qualified business facility is made, and;
- the location of the qualified business is the principal place from which the business is directed or managed, and;
- at least 20 qualified business facility employees are hired as a direct result of that investment.
There is no minimum amount of investment necessary to qualify for the credit, however, some investment must have been made. The taxpayer must qualify for the credit during the first taxable year that operations occur at the qualified business facility investment.
The enhanced business and job development credit is available for investments which began operations after December 31, 1995.
There is no enhanced privilege tax credit available under the Kansas Enterprise Zone Act for any investments that began operations prior to January 1, 1996.
If the investment location is not considered as the place from which the trade or business is directed or managed, the taxpayer may claim the business and job development credit under the Job Expansion and Investment Credit Act of 1976 for Privilege taxpayers. The bank must hire at least two qualified business facility employees as a direct result of the investment to qualify for the credit.
CREDIT AMOUNT
Located in a Kansas metropolitan county or any
other area not designated as a nonmetropolitan region
Employee - $1,500 for each
qualified employee
Investment - $1,000 for each $100,000
of qualified investment
Located in a Kansas nonmetropolitan region
Employee - $2,500 for each
qualified employee
Investment - $1,000 for each $100,000
of qualified investment
LIMITATION OF CREDIT
The credit is limited to 100% of the Kansas privilege tax for the
tax year in which the credit is claimed.
The credit is computed once and the remainder of the credit is carried forward until used as long as the taxpayer maintains the minimum number of qualified employees.
PROCEDURES TO CLAIM THE CREDIT
You may download Schedule K-34 and
the Instructions for Investments that Began Operations in Tax Years
Commencing on or after January 1, 1993 to claim the business
and job development credit under the Kansas Enterprise Zone Act.
Schedule K-34 must be completed and submitted with the privilege
tax return. You may also call the Department of Revenue voice mail
system at (785) 296-4937 to request Schedule K-34 and the appropriate
instructions. You will be asked to give your name, address, phone
number and form(s) you desire. Please allow two weeks for delivery
of your forms.
BUSINESS AND JOB DEVELOPMENT DEFINITIONS
FACILITY
A facility is any factory, mill, plant , refinery,
warehouse, feedlot, building or complex of buildings
located within the state of Kansas, including the land on which
the facility is located and all machinery, equipment and other real
and tangible personal property located at or within the facility
used in connection with the operation of the facility.
BUILDING
A building is a structure where individuals are
employed or which is used to house machinery, equipment or other
property.
SAME OR SUBSTANTIALLY
IDENTICAL REVENUE PRODUCING ENTERPRISE
The same or substantially identical revenue producing
enterprise is a revenue producing enterprise in which the products
produced or sold, services performed or activities conducted are
the same in character and use, are produced, sold, performed or
conducted in the same manner and to or for the same type of customers
as the products, services or activities produced, sold, performed
or conducted in another revenue producing enterprise.
REVENUE
PRODUCING ENTERPRISE
A revenue producing enterprise is:
- the assembly, fabrication, manufacture or processing of any agricultural, mineral or manufactured product;
- the storage, warehousing, distribution or sale of any products of agriculture, aquaculture, mining or manufacturing;
- the feeding of livestock at a feedlot;
- the operation of laboratories or other facilities for scientific, agricultural, aquacultural, animal husbandry or industrial research, development or testing;
- the performance of services of any type;
- the feeding of aquatic plants and animals at an aquaculture operation;
- the administrative management of any of the foregoing activities; or
- any combination of any of the foregoing activities.
Revenue producing enterprise does not include a swine
production facility.
K.S.A. 17-5903(s) provides, ""Swine
production facility" means the land, structures and
related equipment owned or leased by a corporation or limited liability
company and used for housing, breeding, farrowing or feeding of
swine. The term includes within its meaning only such agricultural
land as is necessary for proper disposal of liquid and solid wastes
in environmentally sound amounts for crop production and to avoid
nitrate buildup and for isolation of the facility to reasonably
protect the confined animals from exposure to disease".
QUALIFIED
BUSINESS FACILITY
A qualified business facility is a facility which
is employed in the operation of a revenue producing
enterprise. The facility is not considered as a qualified business
facility if the taxpayer's only activity is to lease that facility
to another person. If the taxpayer uses a portion of the facility
in the operation a revenue producing enterprise, and leases another
portion of the facility to another person or does not use the other
portion in the operation of the revenue producing enterprise, only
the portion which is employed by the taxpayer in the operation of
the revenue producing enterprise shall be considered as a qualified
business facility.
If the facility was acquired by the taxpayer from another person, the facility must not have been employed immediately prior to the transfer of title to the facility to the taxpayer, or to the beginning of the term of the lease of the facility to the taxpayer in the same or substantially identical revenue producing enterprise.
QUALIFIED
BUSINESS FACILITY EMPLOYEES
A qualified business facility employee is a person employed by the
taxpayer in the operation of a qualified business facility during
the taxable year for which a credit is allowed and claimed. A person
is engaged in employment if the person performs duties in connection
with the operation of the qualified business facility on a:
- regular, full-time basis;
- part-time basis, provided the person is customarily performing duties at least 20 hours per week throughout the taxable year; or
- seasonal basis, provided the person performs the duties for substantially all of the season customary for the position in which the person is employed.
The number of qualified business facility employees during the taxable year is the sum of the qualified business facility employees on the last business day of each month of the taxable year divided by 12.
If the qualified business facility is in operation for less than the entire taxable year, the number of qualified business facility employees is determined by dividing the sum of qualified business facility employees on the last business day of each full calendar month during the portion of the taxable year in which the qualified business facility was in operation by the number of full calendar months during the period.
If the facility existed and was operated by the taxpayer prior to the investment, the number of qualified business facility employees employed in the operation of the facility shall be reduced by the average number of individuals employed in the operation of the facility during the taxable year before the taxable year in which the qualified business facility investment was made at the facility.
QUALIFIED
BUSINESS FACILITY INVESTMENT
Qualified business facility investment is the value of real and
tangible personal property which constitutes the qualified business
facility, or which is used by the taxpayer in the operation of the
qualified business facility during the taxable year in which the
credit is allowed and claimed. Qualified business facility investment
does not include the inventory or property held for sale to customers
in the ordinary course of the taxpayer's business.
The value of the property during the taxable year is:
- its original cost if owned by the taxpayer; or
- eight times the net annual rental rate, if leased by the taxpayer. The net annual rental rate is the annual rental rate paid by the taxpayer less any annual rental rate received by the taxpayer from subrentals.
The qualified business facility investment is the sum of the total value of the property on the last business day of each calendar month of the taxable year divided by 12.
If the qualified business facility is in operation for less than an entire taxable year, the qualified business facility investment is determined by dividing the sum of the total value of the property on the last business day of each full calendar month during the portion of the taxable year in which the qualified business facility was in operation by the number of full calendar months during that period.
If the facility existed and was operated by the taxpayer prior to the investment, the amount of the taxpayer's qualified business facility investment in the facility shall be reduced by the average amount of the investment of the taxpayer in the facility for the taxable year before the taxable year in which the qualified business facility investment was made at the facility.
ENTERPRISE
ZONE
An economically distressed area located within a city designated
by the governing body of a city as an enterprise zone and approved
by the Secretary of Economic Development. Local city officials,
county commissioners or the Kansas Department of Commerce can be
contacted to determine if the business is located in an enterprise
zone.
QUALIFIED
TARGETED EMPLOYEE
An individual is a targeted employee if they are:
- an economically disadvantaged cooperative education student;
- an economically disadvantaged ex-convict;
- an economically disadvantaged Vietnam veteran;
- an economically disadvantaged youth;
- eligible work incentive employee;
- general assistance recipients;
- supplemental security income recipients; or
- vocational rehabilitation individuals.
QUALIFIED
BUSINESS FACILITY INCOME
Qualified business facility income is the Kansas taxable income
derived by the taxpayer from the operation of the qualified business
facility.
If a taxpayer has income from the operation of a qualified business facility as well as from other activities within the state, the Kansas taxable income derived from the qualified business facility is determined by multiplying the Kansas taxable income by a fraction. The numerator is the property factor plus the payroll factor and the denominator is two.
The property factor is the average value of real and tangible personal property owned or rented and used in connection with the operation of the qualified business facility divided by the average value of all the taxpayer's real and tangible personal property owned or rented and used in the state.
The payroll factor is the amount paid during the tax period for compensation to qualified business facility employees at the qualified business facility divided by the total amount paid for compensation.
MANUFACTURING
BUSINESS
A manufacturing business is all commercial enterprises identified
under the manufacturing standard industrial classification codes,
major groups 20 through 39.
NONMANUFACTURING
BUSINESS
A nonmanufacturing business is any commercial enterprise other than
a manufacturing business or a retail business. Nonmanufacturing
business also includes the business headquarters
of an enterprise, ancillary support of an enterprise,
and an enterprise designated under standard industrial classification
codes 5961, Catalog and Mail-Order Houses or 7372,
Prepackaged Software, regardless of the firm's
classification as a retail business if that facility creates at
least 20 new full-time positions.
RETAIL BUSINESS
A retail business is:
-
Any commercial enterprise primarily engaged in the sale at retail
of goods or services taxable under the Kansas retailers' sales tax
act;
- any service provider set forth in K.S.A. 17-2707;
- any bank, savings and loan or other lending institution;
- any commercial enterprise whose primary business activity includes the sale of insurance;
- any commercial enterprise deriving its revenues directly from noncommercial customers in exchange for personal services such as barber shops, beauty shops, photographic studios and funeral services.
METROPOLITAN
COUNTY
The following counties are metropolitan counties:
- Douglas
- Johnson
- Leavenworth
- Sedgwick
- Shawnee
- Wyandotte
NONMETROPOLITAN
REGION
A nonmetropolitan region is a region established under K.S.A. 74-50,116.
View a listing of designated
nonmetropolitan regions in Kansas and the date the designation
expires. This list is provided quarterly to the Kansas Department
of Revenue by the Kansas Department of Commerce.
BUSINESS
HEADQUARTERS
Business headquarters is a facility where principal officers of
the business are housed and from which direction, management or
administrative support for transactions is provided for a business
or division of a business or regional division of a business.
ANCILLARY
SUPPORT
Ancillary support of an enterprise is a facility operated by a business
and whose function is to provide services in support of the business,
but is not directly engaged in the business' primary function.
CATALOG
AND MAIL-ORDER HOUSES
Catalog and mail-order houses are primarily engaged in the retail
sale of products by catalog, mail-order and television.
PREPACKAGED
SOFTWARE
Prepackaged software establishments are primarily engaged in the
design, development and production of prepackaged computer software.
SERVICE
PROVIDER SET FORTH IN K.S.A. 17-2707
Certified Public Accountant
Architect
Attorney-at-law
Chiropractor
Dentist
Engineer
Optometrist
Osteopathic physician or surgeon
Physician, surgeon or doctor of medicine
Veterinarian
Podiatrist
Pharmacist
Land surveyor
Licensed psychologist
Specialist in clinical social work
Registered physical therapist
Landscape architect
Registered professional nurse
Real estate broker or salesperson
Clinical Professional Counselor
Geologist
Clinical Psychotherapist
Clinical Marriage and Family Therapist
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