72nd OREGON LEGISLATIVE ASSEMBLY--2003 Regular Session
SA to SB 362
LC 1856/SB 362-2
SENATE AMENDMENTS TO
SENATE BILL 362
By COMMITTEE ON REVENUE
April 29
On page 1 of the printed bill, delete lines 6 through 28 and
delete pages 2 and 3 and insert:
' { + SECTION 2. + } { + As used in sections 2 to 5 of this
2003 Act:
' (1) 'Business operations' means any activity undertaken to
promote the purposes for which a firm exists, except that '
business operations' does not include marketing and sales
activities.
' (2) 'Firm' means a business firm as defined in ORS 285B.650.
' (3) 'Qualified taxpayer' means:
' (a) An individual in a senior executive management position
who has authority to make fundamental business decisions about
the activities or continued existence of the firm; or
' (b) An individual affiliated with a university who is engaged
in signature research, if the individual has authority to make
fundamental decisions about the direction of signature research
conducted at the university.
' (4) 'Signature research' means research conducted on
nanotechnology and multiscale materials and devices that utilize
synergistic combinations of nanotechnology and microtechnology.
' (5) 'University':
' (a) Means a state institution under the direction of the
State Board of Higher Education, the Oregon Health and Science
University or a generally accredited public or not-for-profit
institution of higher education that confers both undergraduate
and graduate degrees; and
' (b) Does not include a community college operated under ORS
chapter 341.
' (6) 'Venture capital firm' means a firm primarily engaged in:
' (a) Identifying start-up companies and young, rapidly growing
companies that have potential to develop into significant
economic contributors; and
' (b) Making private equity investments in the companies
described in paragraph (a) of this subsection. + }
' { + SECTION 3. + } { + (1) An individual seeking the
personal income tax exemption allowed under section 8 of this
2003 Act shall apply to the Economic and Community Development
Department for initial certification under this section.
' (2) The individual must apply for initial certification on or
before the end of the first 12 months following the date:
' (a) The firm begins business operations in this state; or
' (b) The university begins a new line of signature research.
' (3) Application shall be made on a form, prescribed by the
department, that contains the following information:
' (a) The applicant's name, address and taxpayer identification
information.
' (b) If the applicant is affiliated with a university, the
name and address of the university, a description of the specific
research activities in which the applicant is engaged at the
university, the possible uses of the research, an explanation of
the sources of funding for the research, the date on which the
specific line of research was started at the university and the
applicant's educational background and experience in
commercializing research in which the applicant was personally
involved. The information on the form must be sufficient for the
department to determine whether the applicant is a qualified
taxpayer.
' (c) If the applicant is affiliated with a firm, the name,
address and description of the firm with whom the applicant is
affiliated. The description must detail the business operations
of the firm both within this state and elsewhere in a manner that
is sufficient for the department to determine whether the firm
constitutes a venture capital firm, including an explanation of
the types of companies the firm has invested in and a financial
statement setting forth the amount of assets currently
unobligated and available for investment by the firm.
' (d) If the applicant is affiliated with a firm, a description
of the duties, responsibilities and activities engaged in by the
applicant in connection with the applicant's position with the
firm that is sufficient for the department to determine whether
the applicant is a qualified taxpayer. The description must also
include an explanation of any venture capital investment made in
this state in the preceding 12 months in which the applicant was
personally involved.
' (e) Any other information that the department requires.
' (4) An application filed under this section shall be
accompanied by a fee in an amount prescribed by the department by
rule. The fee required by the department may not exceed $1,000.
' (5) When an application is filed under this section, the
department shall review the application and determine whether
initial certification may be issued. The determination to issue
initial certification shall be made by finding that:
' (a) The duties, responsibilities and activities of the
applicant are sufficient for the applicant to be a qualified
taxpayer for purposes of initial certification;
' (b) If the applicant is affiliated with a university, the
research in which the applicant engages constitutes a new line of
signature research begun after January 1, 2003, for which there
exists stable, ongoing funding of at least $200,000 per year and
for which there exists one or more possible commercial
applications; and
' (c) If the applicant is affiliated with a firm, the firm with
which the applicant is affiliated is a venture capital firm that
has begun business operations in this state within the past 12
months, has at least $75 million in unobligated venture capital
that is available for investment and has invested at least $2
million in one or more businesses in this state in the previous
12 months.
' (6)(a) If the department determines that the applicant,
application and firm or university with which the applicant is
affiliated meet the requirements for initial certification under
this section, the department shall issue an initial certification
to the applicant, certifying that the applicant may claim the
personal income tax exemption established under section 8 of this
2003 Act. The certification shall be made in writing and shall
state the date the application was filed with the department and
any other information the department determines necessary.
' (b) Notwithstanding paragraph (a) of this subsection, an
applicant may not receive initial certification under this
section if the applicant is affiliated with a firm:
' (A) That is related under section 267 of the Internal Revenue
Code to a firm that has conducted business operations in this
state for more than 12 months during the five years preceding the
date of application for initial certification; or
' (B) At which another individual who has obtained initial
certification under this section is affiliated.
' (7) Notwithstanding subsection (6) of this section, the
department may not issue initial certification to more than:
' (a) 30 individuals described in subsection (5)(b) of this
section; or
' (b) 15 individuals described in subsection (5)(c) of this
section.
' (8) If the department determines that the applicant,
application or firm or university with which the applicant is
affiliated does not meet the requirements for initial
certification under this section, the department may not issue
certification. The applicant may appeal the decision not to issue
an initial certification under this section in the manner of a
contested case under ORS 183.310 to 183.550, except that an
appeal may not be brought if the reason for the denial of the
initial certification is because the quotas described in
subsection (7) of this section have been met. + }
' { + SECTION 4. + } { + (1) Following issuance of an
initial certification under section 3 of this 2003 Act and in
order to continue to claim the personal income tax exemption set
forth in section 8 of this 2003 Act, a holder of initial
certification must apply for annual certification under this
section. The application for annual certification shall be filed
with the Economic and Community Development Department within the
period commencing 30 days before and ending 30 days after an
anniversary of the date the preceding application for initial or
annual certification was filed with the department.
' (2) An application for annual certification shall contain all
of the information required in an application for initial
certification under section 3 of this 2003 Act, updated to
reflect the activities of the applicant and firm or university
for the 12 months following the date of the last application for
initial or annual certification.
' (3) An application filed under this section must be
accompanied by a fee in an amount prescribed by the department by
rule. The fee required by the department may not exceed $1,000.
' (4) The department shall review an application for annual
certification and issue the annual certification if the
application would have been approved for initial certification,
except that:
' (a) The requirement that a firm has begun business operations
within this state within the previous 12 months is waived;
' (b) In the case of a venture capital firm, the annual
certification may not be issued unless the firm continues to have
at least $75 million in unobligated venture capital that is
available for investment;
' (c) In the case of a qualified taxpayer associated with a
venture capital firm, the annual certification may not be issued
unless the qualified taxpayer has invested at least $2 million in
one or more businesses in this state in the previous 12 months;
' (d) In the case of a qualified taxpayer conducting signature
research, the annual certification may not be issued unless the
qualified taxpayer is able to demonstrate at least $200,000 in
stable annual funding from public or private sources that is
dedicated to conducting the research; and
' (e) A firm must have been an ongoing concern for the entire
12-month period for which the application for annual
certification is made.
' (5) If the department determines that the applicant,
application and firm or university with which the applicant is
affiliated meet the requirements for annual certification under
this section, the department shall issue an annual certification
to the applicant, certifying that the applicant may claim the
personal income tax exemption established under section 8 of this
2003 Act. The certification shall be made in writing and shall
state the date the application was filed with the department and
any other information the department determines necessary.
' (6) If the department determines that the applicant,
application or firm or university with which the applicant is
affiliated does not meet the requirements for annual
certification under this section, the department may not issue
certification. The applicant may appeal the decision not to
issue an annual certification under this section in the manner of
a contested case under ORS 183.310 to 183.550. + }
' { + SECTION 5. + } { + At the request of the Department of
Revenue, the Economic and Community Development Department shall
forward copies of initial and annual certifications made under
sections 3 and 4 of this 2003 Act to the Department of
Revenue. + }
' { + SECTION 6. + } { + An application for initial
certification under section 3 of this 2003 Act may not be filed
with the Economic and Community Development Department prior to
December 1, 2003. + }
' { + SECTION 7. + } { + Section 8 of this 2003 Act is added
to and made a part of ORS chapter 316. + }
' { + SECTION 8. + } { + (1) Income derived from a qualified
taxpayer's affiliation with a venture capital firm or a
university is exempt from the tax imposed under this chapter if
the taxpayer has been issued an initial or annual certification
by the Economic and Community Development Department under
section 3 or 4 of this 2003 Act.
' (2) The exemption in this section applies to the tax year in
which the application for certification was filed with the
Economic and Community Development Department, as indicated on
the letter of certification issued to the qualified taxpayer.
' (3) For purposes of this section, income derived from a
qualified taxpayer's affiliation with a firm or university
includes but is not limited to wages, salary, guaranteed
payments, bonuses, commissions, transfers of stock or other
property from the firm to the taxpayer, and gain from the sale of
stock or other ownership interest in the firm without regard to
whether the taxpayer acquired the stock or ownership interest
from the firm or elsewhere.
' (4) Notwithstanding subsection (1) of this section, the
exemption may not be claimed for a tax year that would constitute
the eighth or greater tax year in which an exemption under this
section is claimed.
' (5) The definitions in section 2 of this 2003 Act apply to
this section. + } ' .
On page 4, delete lines 1 through 29.
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