SB 291

This bill would allow a tax credit against the state income tax of an eligible taxpayer's qualified railroad reconstruction or replacement expenditures, which includes the maintenance, reconstruction, or replacement of railroad infrastructure within the state that is owned or leased by the eligible taxpayer

This bill would allow an eligible taxpayer who receives the tax credit to transfer the tax credit under certain conditions and would sunset the tax credit in five years

Relating to tax credits; to create The Railroad Modernization Act of 2019; to authorize a tax credit against the state income tax of an eligible taxpayer's qualified railroad reconstruction or replacement expenditures; and to authorize the transfer of the credit.

Section 1

This act shall be known and may be cited as The Railroad Modernization Act of 2019.

Section 2

(a) As used in this act, the following words shall have the following meanings: (1) ELIGIBLE TAXPAYER. A railroad that is classified by the United States Surface Transportation Board as a Class II or Class III railroad. (2) ELIGIBLE TRANSFEREE. A taxpayer subject to the state income tax who is transferred the tax credit allowed under subsection (b) by an eligible taxpayer. (3) QUALIFIED RAILROAD RECONSTRUCTION OR REPLACEMENT EXPENDITURES. Expenditures within the taxable year for the maintenance, reconstruction, or replacement of railroad infrastructure within the state that is owned or leased by an eligible taxpayer. The term includes new construction of industrial leads, switches, spurs, sidings, and extensions of existing sidings by an eligible taxpayer. (4) RAILROAD INFRASTRUCTURE. Includes, but is not limited to, the track, roadbed, bridges, signaling systems and train control, industrial leads, and track-related structures owned or leased by an eligible taxpayer. (b) For tax years beginning after December 31, 2019, there is a credit allowed against the state income tax equal to 50 percent of an eligible taxpayer's qualified railroad reconstruction or replacement expenditures. Where the taxes owed by the eligible taxpayer are less than the tax credit, the eligible taxpayer may not be entitled to claim a refund for the difference. (c) The income tax credit allowed under this section may not exceed three thousand five hundred dollars ($3,500) multiplied by the number of miles of railroad track owned or leased within the state by the eligible taxpayer at the close of the taxable year. (d)(1) All or any portion of the income tax credit authorized under this section may be transferable and assignable by written transfer agreement and subject to any notice and verification requirements to be determined by the Department of Revenue. Once a credit is transferred, only the transferee may utilize the credit and the credit may not be transferred again. An eligible transferee of the credit may use the amount of credits transferred to offset any income tax. (2) The Department of Revenue, by rule, shall adopt a written transfer agreement form. The written transfer agreement form must contain the name, address, and taxpayer identification number of the parties to the transfer; the amount of credit being transferred; the year the credit was originally allowed to the eligible taxpayer; and the tax year or years for which the credit is claimed. (3) The eligible taxpayer allowed the credit under this section and the subsequent eligible transferee shall jointly file a copy of the written transfer agreement with the Department of Revenue within 30 days of the transfer in order for the agreement to be valid. (4) For each transfer, the transferor shall file with the Department of Revenue all of the following: a. A completed transfer statement form. b. A copy of the tax credit certificate issued by the eligible taxpayer documenting the amount of tax credits which the transferor intends to transfer. c. A copy of the proposed written transfer agreement. d. A transfer fee payable to the Department of Revenue in the amount of one thousand dollars ($1,000). (e) Any portion of the credit allowed under this section that is not used following the tax year of qualification may be carried over by the eligible taxpayer to any of the five tax years subsequent to the year of qualification. (f) The income tax credit allowed under this section that is granted to a partnership, limited liability company, S corporation, trust, or estate, shall be claimed at the entity level and may pass through to the partners, members, or owners. (g) The Department of Revenue shall report annually to the Legislature the total number of credits claimed and the total amount of credits claimed during the year. The report shall be due on the fifth legislative day of each regular session. (h) The tax credit allowed under this section shall be effective for the 2019 tax year and shall continue through the 2023 tax year, unless extended by act of the Legislature.

Section 3

This act shall become effective on the first day of the third month following its passage and approval by the Governor, or its otherwise becoming law.