43-1076. Credit for employment by a healthy forest enterprise
A. For taxable years beginning from and after December 31, 2004 through December 31, 2024, a credit is allowed against the taxes imposed by this title for net increases in qualified employment positions by a qualified business that is certified by the Arizona commerce authority as a healthy forest enterprise pursuant to section 41-1516.
B. Subject to subsection E of this section, the amount of the credit is equal to:
1. One-fourth of the taxable wages paid to an employee in a qualified employment position, not to exceed $500 per qualified employment position, in the first year or partial year of employment.
2. One-third of the taxable wages paid to an employee in a qualified employment position, not to exceed $1, 000 per qualified employment position, in the second year of continuous employment.
3. One-half of the taxable wages paid to an employee in a qualified employment position, not to exceed $1, 500 per qualified employment position, in the third year of continuous employment.
C. To qualify for a credit under this section:
1. The business must employ at least one new full-time employee in a qualified employment position in the first taxable year in which the credit is claimed.
2. Each employee with respect to whom a credit is claimed must reside in this state on the date of hire.
3. A qualified employment position must meet all of the following requirements:
(a) The position must be full-time employment for a minimum of one thousand five hundred fifty hours per year, unless a shorter period of employment is due to forest closures or weather conditions beyond the taxpayer's control.
(b) The job duties must primarily involve or directly support harvesting, transporting or processing qualifying forest products removed from qualifying projects as defined in section 41-1516 into a product having commercial value.
(c) The employer must pay compensation at least equal to the wage offer by county as computed annually by the department of economic security research administration division.
(d) The employee must have been employed for at least ninety days during the first taxable year. An employee who is hired during the last ninety days of the taxable year shall be considered a new employee during the next taxable year. A qualified employment position that is filled during the last ninety days of the taxable year is considered to be a new qualified employment position for the next taxable year.
(e) The employee has not been previously employed by the taxpayer within twelve months before the current date of hire.
4. The employer shall provide health insurance coverage for employees as follows:
(a) The employer shall pay:
(i) At least twenty-five percent of the premium or membership cost of the insurance program in the third year the taxpayer claims a credit under this section. If the taxpayer is self-insured, the taxpayer must pay at least twenty-five percent of a predetermined fixed cost per employee for an insurance program that is payable whether or not the employee has filed claims.
(ii) At least forty percent of the premium or membership cost in the fourth year the taxpayer claims a credit under this section. If the taxpayer is self-insured, the taxpayer must pay at least forty percent of a predetermined fixed cost per employee for an insurance program that is payable whether or not the employee has filed claims.
(iii) At least fifty percent of the premium or membership cost of the insurance program in the fifth and each subsequent year the taxpayer claims a credit under this section. If the taxpayer is self-insured, the taxpayer must pay at least fifty percent of a predetermined fixed cost per employee for an insurance program that is payable whether or not the employee has filed claims.
(b) An employer shall not reduce the amount of health insurance coverage provided to employees before certification by the Arizona commerce authority.
D. A credit is allowed for employment in the second and third year only for qualified employment positions for which a credit was allowed and claimed by the taxpayer on the original first and second year tax returns.
E. The net increase in the number of qualified employment positions is the lesser of the total number of filled qualified employment positions created during the taxable year or the difference between the average number of full-time employees in the current taxable year and the average number of full-time employees during the immediately preceding taxable year. The net increase in the number of qualified employment positions computed under this subsection may not exceed two hundred qualified employment positions per taxpayer each year.
F. A taxpayer who claims a credit under section 43-1074 may not claim a credit under this section with respect to the same employees.
G. If the allowable tax credit exceeds the income taxes otherwise due on the claimant's income, or if there are no state income taxes due on the claimant's income, the amount of the claim not used as an offset against income taxes may be carried forward as a tax credit against subsequent years' income tax liability for the period not to exceed five taxable years, provided the business maintains its certification under section 41-1516.
H. Co-owners of a business, including individual partners in a partnership, may each claim only the pro rata share of the credit allowed under this section based on the ownership interest. The total of the credits allowed all such owners of the business may not exceed the amount that would have been allowed for a sole owner of the business.
I. If a qualified business changes ownership through reorganization, stock purchase or merger, the new taxpayer may claim first year credits only for one or more qualified employment positions that it created and filled with an eligible employee after the purchase or reorganization was complete. If a person purchases a business that had qualified for first or second year credits or changes ownership through reorganization, stock purchase or merger, the new taxpayer may claim the second or third year credits if it meets the other eligibility requirements of this section. Credits for which a taxpayer qualified before the changes described in this subsection are terminated and lost at the time the changes are implemented.
J. If, within five taxable years after first receiving a credit pursuant to this section, the certification of qualification of a business is terminated or revoked under section 41-1516 other than for reasons beyond the control of the business as determined by the Arizona commerce authority, the credits allowed the business pursuant to this section are subject to recapture pursuant to this subsection. This subsection applies only in the case of the termination or revocation of a certification of qualification. This subsection does not apply if, in any taxable year, a taxpayer otherwise does not qualify for or fails to claim the credit under this section. The recapture of credits under this subsection is computed by increasing the amount of taxes imposed in the year following the year in which the qualification of the business was terminated or revoked by an amount determined by multiplying the full amount of all credits previously allowed under this section by a percentage determined as follows:
1. If the initial credit under this section was allowed for the taxable year immediately preceding the taxable year in which the certification of qualification of a business is terminated or revoked, one hundred percent.
2. If the initial credit under this section was allowed two taxable years before the taxable year in which the certification of qualification of a business is terminated or revoked, eighty percent.
3. If the initial credit under this section was allowed three taxable years before the taxable year in which the certification of qualification of a business is terminated or revoked, sixty percent.
4. If the initial credit under this section was allowed four taxable years before the taxable year in which the certification of qualification of a business is terminated or revoked, forty percent.
5. If the initial credit under this section was allowed five taxable years before the taxable year in which the certification of qualification of a business is terminated or revoked, twenty percent.