HB608 Alabama 2011 Session

Summary

Primary Sponsor

Alan Harper

Republican

Co-Sponsors

Joe HubbardBarry MaskPhil Williams

Session

Regular Session 2011

Title

Economic development, tariff tax credits of capital investment costs for qualifying projects, job creation a qualifying factor, Tariff Credit Act

Summary

HB608 creates a Tariff Credit Act that offers tax credits tied to tariff costs to attract large investments in Alabama that create jobs.

What This Bill Does

It establishes a tariff credit program that can cover tariff costs for a qualifying project, with a cap of up to $25 million or 25% of the project's capital costs, whichever is smaller. Qualifying projects must cost at least $100 million and create at least 100 new full-time jobs with wages at or above Alabama's median; the credit can be used against state income tax or transferred to another taxpayer for up to three years, but cannot be used in the year full-time operations begin and is not available for 19 years after that year. The act provides for a detailed application and approval process, pass-through tax treatment for owners and beneficiaries, annual reporting and affidavits to ensure compliance, and penalties if employment targets are not maintained; it also includes sunset provisions, transfer rules, and a mechanism for potential clawbacks.

Who It Affects

• Investing companies (and related parties) considering or undertaking qualifying projects in Alabama, who may receive a tariff credit against their state taxes or have those credits transferred to others.
• Transferee taxpayers who receive transferred tariff credits and apply them to their own state income tax or, in some cases, financial institution excise tax liabilities.
• Owners, partners, shareholders, members, or beneficiaries of pass-through entities (e.g., sole proprietorships, partnerships, LLCs, S corporations) who receive tax credits through their personal or corporate taxes.
• Alabama workers and communities, as the program sets a base wage requirement and minimum employment level intended to drive job creation and ensure wages meet state standards.

Key Provisions

• Establishes the Tariff Credit Act of 2011 to provide limited economic development incentives tied to tariff costs.
• Defines key terms, including base wage requirement (state median income), capital costs, full-time operations, minimum employment level (100 new employees), qualifying project (at least $100 million capital cost with industrial/warehousing/research activity).
• Qualifying project must have capital costs of at least $100 million and employ at least 100 new full-time workers, paying wages at or above the state median.
• Tariff costs are defined as final and preliminary duties under 19 U.S.C. § 1671 through § 1677(n) incurred during the term of the qualifying project.
• Tariff credit amount is discretionary up to the project’s tariff costs, not to exceed $25 million or 25% of capital costs, whichever is less; can be used against state income tax or transferred to a transferee for up to three years; not usable in the year full-time operations begin and not usable for 19 years after that year.
• Transferring and use of credits require notices (Notice of Tariff Credit, Notice of Tariff Credit Transfer) and compliance with Department rules; transferee taxpayers must file notices to use transferred credits.
• Pass-through tax treatment allows credits to flow to owners/partners/shareholders/members/beneficiaries of investing companies, matching various Alabama tax statutes for individuals, corporations, and trusts.
• Credits cannot be claimed if the investing company also claims a capital credit under Article 7; credits are not stackable with that capital credit.
• Department provisions include annual reporting on qualifying projects, regulatory rulemaking, possible audit rights, and a transfer accounting fee (up to 5% of the credit value, payable by the transferee).
• Sunset provision: no new qualifying projects after December 31, 2015 unless the Legislature passes a joint resolution to continue; projects filed with intent by that date may still receive credits.
• If the state refunds tariff costs due to a U.S. government action, these costs are treated as income up to the credit value and taxed at 100% with no further credits.
• If a project fails to maintain the minimum employment level for three consecutive post-term tax years, the state can seek pro rata repayment of the tariff credit.
• The act becomes effective immediately and applies to tax years and periods beginning after December 31, 2010.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Economic Development