GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1997

H	1 

HOUSE BILL 1173

Short Title:  Construction Worker Training Credit.	(Public)
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Sponsors: Representatives Dedmon; Baddour, Barbee, Black, Bonner, Braswell, Carpenter, Clary, Cole, Earle, Eddins, Fox, Goodwin, Hill, R. Hunter, Ives, Jarrell, Jeffus, Moore, Mosley, Nesbitt, Rayfield, Saunders, Sexton, Sherrill, Smith, Tallent, Tolson, Warner, Warwick, Weatherly, C. Wilson, Wood, and Yongue.
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Referred to:  Commerce, if favorable, Finance.
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April 29, 1997

A BILL TO BE ENTITLED
AN ACT TO PROVIDE TAX CREDITS FOR CONSTRUCTION EMPLOYERS WHO PROVIDE CRAFTWORKER TRAINING TO EMPLOYEES AND WHO HIRE WELFARE RECIPIENTS.
The General Assembly of North Carolina enacts:
Section 1. G.S. 105-129.2 reads as rewritten:
"§ 105-129.2.  (Repealed effective January 1, 2002 – see note) Definitions.
The following definitions apply in this Article:
(1)	Construction. – Any of the following businesses as defined in Major Groups 15, 16, and 17 of the Standard Industrial Classification Manual issued by the United States Bureau of the Census:
a.	Construction.
b.	Heavy construction.
c.	Building-related special trades.
(1a)	Cost. – Defined in section 179 of the Code.
(2)	Data processing. – Defined in the Standard Industrial Classification Manual issued by the United States Bureau of the Census.
(3)	Enterprise tier. – The classification assigned to an area pursuant to G.S. 105-129.3.
(4)	Full-time job. – A position that requires at least 1,600 hours of work per year and is intended to be held by one employee during the entire year. A full-time employee is an employee who holds a full-time job.
(5)	Machinery and equipment. – Engines, machinery, tools, and implements that are capitalized by the taxpayer for tax purposes under the Code and are used or designed to be used in manufacturing or processing, warehousing and distribution, or data processing. The term does not include real property as defined in G.S. 105-273 or rolling stock as defined in G.S. 105-333.
(6)	Manufacturing and processing. – Defined in the Standard Industrial Classification Manual issued by the United States Bureau of the Census.
(7)	Purchase. – Defined in section 179 of the Code.
(8)	Warehousing and distribution. – Defined in the Standard Industrial Classification Manual issued by the United States Bureau of the Census.
(9)	Welfare recipient. – A person who was a recipient of aid to families with dependent children within the 12-month period before being hired by the taxpayer."
Section 2.  G.S. 105-129.4 reads as rewritten:
"§ 105-129.4.  (Repealed effective January 1, 2002) Eligibility; forfeiture.
(a)	Type of Business. – A taxpayer is eligible for the credit for creating a construction job for a welfare recipient under G.S. 105-129.8(a1) or the credit for construction craftworker training under G.S. 105-129.11(b) if the taxpayer is engaged in the business of construction.  A taxpayer is eligible for the remaining credits allowed by this Article if the taxpayer engages in manufacturing or processing, warehousing or distributing, or data processing, and the jobs with respect to which a credit is claimed are created in that business, the machinery and equipment with respect to which a credit is claimed are used in that business, and the research and development for which a credit is claimed are carried out as part of that business.
(b)	Wage Standard. – A taxpayer is eligible for the credit for creating jobs or the credit for worker training if the jobs for which the credit is claimed meet the wage standard at the time the taxpayer applies for the credit. A taxpayer is eligible for the credit for investing in machinery and equipment or the credit for research and development if the jobs at the location with respect to which the credit is claimed meet the wage standard at the time the taxpayer applies for the credit. Jobs meet the wage standard if they pay an average weekly wage that is at least ten percent (10%) above the average weekly wage paid in the county in which the jobs will be located. In calculating the average weekly wage of jobs, positions that pay a wage or salary at a rate that exceeds one hundred thousand dollars ($100,000) a year shall be excluded. For the purpose of this subsection, the average wage in a county is the average wage for all insured industries in the county as computed by the Employment Security Commission for the most recent period for which data are available.
(c)	Worker Training. – A taxpayer is eligible for the tax credit for worker training only for training workers who occupy jobs for which the taxpayer is eligible to claim an installment of the credit for creating jobs or which are full-time positions at a location with respect to which the taxpayer is eligible to claim an installment of the credit for investing in machinery and equipment for the taxable year.
The credit for worker training is allowed only with respect to employees in positions not classified as exempt under the Fair Labor Standards Act, 29 U.S.C. § 213(a)(1) and for expenditures for training that would be eligible for expenditure or reimbursement under the Department of Community Colleges' New and Expanding Industry Program, as determined by guidelines adopted by the State Board of Community Colleges. To establish eligibility, the taxpayer must obtain as part of the application process under G.S. 105-129.6 the certification of the Department of Community Colleges that the taxpayer's planned worker training would satisfy the requirements of this paragraph. A taxpayer shall apply to the Department of Community Colleges for this certification. The application must be on a form provided by the Department of Community Colleges, must provide a detailed plan of the worker training to be provided, and must contain any information required by the Department of Community Colleges to determine whether the requirements of this paragraph will be satisfied. If the Department of Community Colleges determines that the planned worker training meets the requirements of this paragraph, the Department of Community Colleges shall issue a certificate describing the location with respect to which the credit is claimed and stating that the planned worker training meets the requirements of this paragraph. The State Board of Community Colleges may adopt rules in accordance with Chapter 150B of the General Statutes that are needed to carry out its responsibilities under this paragraph.
(c1)	Construction Craftworker Training. – A taxpayer is eligible for the tax credit for construction craftworker training only for training construction craftworkers in positions not classified as exempt under the Fair Labor Standards Act, 29 U.S.C. § 213(a)(1), and only for training provided pursuant to a program that satisfies the following conditions:
(1)	It combines classroom instruction and jobsite training in construction craftwork.
(2)	It includes competency testing to verify completion of each stage of training.
(3)	It is approved by the Department of Labor, the Department of Community Colleges, or a statewide trade association that represents employers engaged in the construction business.
To establish eligibility, the taxpayer must obtain as part of the application process under G.S. 105-129.6 the certification of the Department of Community Colleges that the taxpayer's planned construction craftworker training would satisfy the requirements of this subsection. A taxpayer shall apply to the Department of Community Colleges for this certification. The application must be on a form provided by the Department of Community Colleges, must provide a detailed plan of the construction craftworker training to be provided, and must contain any information required by the Department of Community Colleges to determine whether the requirements of this subsection will be satisfied. If the Department of Community Colleges determines that the planned construction craftworker training meets the requirements of this subsection, the Department of Community Colleges shall issue a certificate describing the taxpayer, identifying the entity that approved the training program, and stating that the planned construction craftworker training meets the requirements of this subsection.  The State Board of Community Colleges may adopt rules in accordance with Chapter 150B of the General Statutes that are needed to carry out its responsibilities under this subsection.
(d)	Forfeiture. – A taxpayer forfeits a credit allowed under this Article if the taxpayer was not eligible for the credit at the time the taxpayer applied for the credit. A taxpayer that forfeits a credit under this Article is liable for all past taxes avoided as a result of the credit plus interest at the rate established under G.S. 105-241.1(i), computed from the date the taxes would have been due if the credit had not been allowed. The past taxes and interest are due 30 days after the date the credit is forfeited; a taxpayer that fails to pay the past taxes and interest by the due date is subject to the penalties provided in G.S. 105-236. If a taxpayer forfeits the credit for creating jobs or the credit for investing in machinery and equipment, the taxpayer also forfeits any credit for worker training claimed for the jobs for which the credit for creating jobs was claimed or the jobs at the location with respect to which the credit for investing in machinery and equipment was claimed.
(e)	Change in Ownership of Business. – The sale, merger, acquisition, or bankruptcy of a business, or any other transaction by which an existing business reformulates itself as another business, does not create new eligibility in a succeeding business with respect to credits for which the predecessor was not eligible under this Article. A successor business may, however, take any installment of or carried-over portion of a credit that its predecessor could have taken if it had a tax liability."
Section 3.  G.S. 105-129.8 reads as rewritten:
"§ 105-129.8.  (Repealed effective January 1, 2002) Credits for creating jobs.
(a)	Creating Jobs. – A taxpayer that meets the eligibility requirements set out in G.S. 105-129.4, has five or more employees for at least 40 weeks during the taxable year, and hires an additional full-time employee during that year to fill a position located in this State is allowed a credit for creating a new full-time job. The amount of the credit for each new full-time job created is set out in the table below and is based on the enterprise tier of the area in which the position is located: 
Area Enterprise Tier	Amount of Credit
	Tier One        	$12,500
Tier Two       	4,000
Tier Three        	3,000
Tier Four        	1,000
Tier Five        	500
A position is located in an area if more than fifty percent (50%) of the employee's duties are performed in the area. 
(a1)	Creating Construction Jobs for Welfare Recipients. – A taxpayer that is engaged in the construction business, has five or more employees for at least 40 weeks during the taxable year, and hires a welfare recipient as an additional full-time employee during the year is allowed a credit of five hundred dollars ($500.00) for the job.
(a2)	The credit may not be taken in the taxable year in which the additional employee is hired. Instead, the credit shall be taken in equal installments over the four years following the taxable year in which the additional employee was hired and shall be conditioned on the continued employment by the taxpayer of the number of full-time employees the taxpayer had upon hiring the employee that caused the taxpayer to qualify for the credit.
If, in one of the four years in which the installment of a credit accrues, the number of the taxpayer's full-time employees falls below the number of full-time employees the taxpayer had in the year in which the taxpayer qualified for the credit, the credit expires and the taxpayer may not take any remaining installment of the credit. The taxpayer may, however, take the portion of an installment that accrued in a previous year and was carried forward to the extent permitted under G.S. 105-129.5.
If, in one of the four years in which the installment of a credit accrues, a job for which the welfare recipient credit was allowed is no longer filled by a welfare recipient, the credit expires and the taxpayer may not take any remaining installment of the welfare recipient credit with respect to that job.
Jobs transferred from one area in the State to another area in the State shall not be considered new jobs for purposes of this section. If, in one of the four years in which the installment of a credit accrues, the position filled by the employee is moved to an area in a higher- or lower-numbered enterprise tier, the remaining installments of the credit shall be calculated as if the position had been created initially in the area to which it was moved.
(b)	Repealed by Session Laws 1989, c. 111, s. 1.
(b1),	(c) Repealed by Session Laws 1996, Second Extra Session, c. 13, s. 3.3.
(d)	Planned Expansion. – A taxpayer that signs a letter of commitment with the Department of Commerce to create at least twenty new full-time jobs in a specific area within two years of the date the letter is signed qualifies for the credit in the amount allowed by subsection (a) of this section based on the area's enterprise tier for that year even though the employees are not hired that year. The credit shall be available in the taxable year after at least twenty employees have been hired if the hirings are within the two-year commitment period. The conditions outlined in subsection (a) apply to a credit taken under this subsection except that if the area is redesignated to a higher-numbered enterprise tier after the year the letter of commitment was signed, the credit is allowed based on the area's enterprise tier for the year the letter was signed. If the taxpayer does not hire the employees within the two-year period, the taxpayer does not qualify for the credit. However, if the taxpayer qualifies for a credit under subsection (a) in the year any new employees are hired, the taxpayer may take the credit under that subsection.
(e),	(f) Repealed by Session Laws 1996, Second Extra Session, c. 13, s. 3.3 for taxable years beginning on or after January 1, 1996."
Section 4.  G.S. 105-129.11 reads as rewritten:
"§ 105-129.11.  (Repealed effective January 1, 2002) Credits for worker training and construction craftworker training.
(a)	Worker Training. – A taxpayer that provides worker training for five or more of its eligible employees during the taxable year is allowed a credit equal to fifty percent (50%) of its eligible expenditures for the training. For positions located in an enterprise tier one area, the credit may not exceed one thousand dollars ($1,000) per employee trained during the taxable year. For other positions, the credit may not exceed five hundred dollars ($500.00) per employee trained during the taxable year. A position is located in an area if more than fifty percent (50%) of the employee's duties are performed in the area.
(b)	Construction Craftworker Training. – A taxpayer that is engaged in the construction business and provides construction craftworker training to its eligible employees is allowed a credit equal to five hundred dollars ($500.00) for each employee who completes his or her 1,000th hour of the provided training during the taxable year.
(c)	Eligibility. – The eligibility of a taxpayer's training, expenditures, and employees is determined as provided in G.S. 105-129.4."
Section 5.  This act is effective for taxable years beginning on or after January 1, 1998.