Alabama Jobs Act.

Ala. Code tit. 40, ch. 18, art. 16

in effect

Ala. Code § 40-18-370 Short Title; Legislative Findings; Definitions.

40-18-370. Short Title; Legislative Findings; Definitions. (a) This article shall be known and may be cited as the Alabama Jobs Act. (b) The Legislature makes the following findings: (1) The economic well-being of the citizens of the state will be enhanced by the increased development and growth of employment within Alabama. (2) It is in the best interests of the state to provide certain incentives to allow the state to foster economic development through the recruitment of quality projects and the expansion of existing businesses within Alabama. (3) The incentives provided for in this article do not raise any taxes for any individuals or businesses in Alabama under state law. (4) The incentives provided in this article will allow the state to encourage the creation of new jobs that may not otherwise exist within the State of Alabama. (5) The incentives provided in this article will increase revenues for the state without increasing taxes. (6) The Constitution of Alabama grants the Legislature the authority to approve and authorize exemptions, exclusions, deductions, and credits from taxation in order to define the net proceeds of any tax payable under state law. (7) The Constitution of Alabama was framed, and the laws of the state were enacted, with the goal of protecting, encouraging, and developing individual enterprise. (8) The incentives provided in this article will not decrease the salary paid to any education personnel. (9) The powers to be granted and the purposes to be accomplished by this article will create an environment for the recruitment of quality projects and the expansion of existing businesses within Alabama. (10) Economic development through tax and financial incentives benefits the citizens of the state and is a public purpose of the state. (c) In addition to the definitions found in Section 40-18-1, the following words and phrases have the following meanings: (1) APPROVED COMPANY. Any company determined by the Secretary of Commerce and the Governor to meet the criteria provided in Section 40-18-373. (2) CAPITAL INVESTMENT. All costs and expenses incurred by the incentivized company in connection with the acquisition, construction, installation, and equipping of a qualifying project, if such costs are required to be capitalized for purposes of the federal income tax, determined without regard to any rule that permits expenditures properly chargeable to a capital account to be treated as current expenditures. However, for any project involving the extraction of natural resources, the capital investment shall not include the costs of acquiring land, land recording fees, architectural and engineering services, environmental studies and environmental mitigation. (3) COMPANY. Anyone or anything that has the powers to own a project and have employees. (4)EMPLOYEES. Individuals employed in full time positions created by or through a qualifying project: a. Who are being paid directly by an approved company, related company, common paymaster, or joint venturer; and b. Whom the approved company, related company, common paymaster, or joint venturer identifies as its employees to the Department of Revenue, or the Department of Labor on returns or reports filed with the foregoing, including, but not limited to, Form A-6, Form A-1, Form A-2, UC-CR-4, and UC-10-R. (5) INCENTIVE PERIOD. The period or periods of time during which an incentivized company can receive one or more of the jobs act incentives. (6) INCENTIVIZED COMPANY. An approved company and any related company that are allowed to claim one or more of the jobs act incentives as provided for in the project agreement. (7) INVESTMENT CREDIT. The annual incentive provided in Section 40-18-376. (8) JOBS ACT INCENTIVES. The jobs credit and the investment credit as authorized and provided for in this article. (9) JOBS CREDIT. The annual incentive provided in Section 40-18-375. (10) NAICS CODE. Any sector, subsector, industry group, industry or national industry of the 2012 North American Industry Classification System, or any similar classification system developed in conjunction with the United States Department of Commerce or Office of Management and Budget. (11) PROJECT. Any land, building, or other improvements, and all real and personal properties, whether or not contiguous and whether or not previously in existence, if in Alabama and if deemed necessary or useful in connection with an activity listed in Section 40-18-372(1). (12) PROJECT AGREEMENT. The agreement entered into between an approved company and the Governor establishing the terms and conditions for the provision of the jobs act incentives, as provided for in Section 40-18-374. (13) QUALIFYING PROJECT. Any project to be undertaken by an approved company that satisfies Section 40-18-372. (14) RELATED COMPANY. Any entity that owns or is owned, directly or through one or more entities, a 50 percent or greater interest in the capital or profits of another. (15) RENEWABLE ENERGY GENERATION. Energy derived from biomass, geothermal, hydrogen, hydropower, marine energy, solar, or wind. (16) UTILITY TAXES. The taxes imposed by Sections 40-21-82 and 40-21-102. (17) WAGES. Total wages of an employee, including gross wages, salaries, overtime and bonuses, defined by reference to Section 25-4-16(b), without application of Sections 25-4-16(b)(1), 25-4-16(b)(2)a., 25-4-16(b)(3), and 25-4-16(b)(4). (Act 2015-27, p. 103, §§1-3; Act 2016-321, p. 799, §1; Act 2017-442, §1(b)(7); Act 2023-34, §2.)

Ala. Code § 40-18-370.1 Legislative Findings as to Enhancement of Alabama Jobs Act.

40-18-370.1. Legislative Findings as to Enhancement of Alabama Jobs Act. The Legislature finds as follows: (a) While Alabama’s incentive programs have succeeded in growing industry in the more populated parts of the state, Alabama’s rural and low growth communities have not enjoyed the same rates of success. (b) Alabama’s incentives grew out of a need to attract heavy industry to the state. Now, Alabama must also prepare for the future by attracting and retaining high-tech companies, and preparing and retaining a workforce trained for such jobs. (c) New tools must be brought to bear to solve Alabama’s rural, low growth, and high-tech deficits. (d) It is a public purpose to expand Alabama’s incentives laws to attract and retain companies in rural and low growth areas in Alabama, and high-tech companies and workers throughout the state. The tools used in Act 2019-392 are urgently needed to solve these problems. (e) The Legislature finds that the enhancements to the Alabama Jobs Act, as found in Act 2019-392, may be made without compromising on the strict requirement that the state shall not offer any such incentives to the extent that the tax incentives sought exceed the anticipated revenues to the state, as required by Section 40-18-373(1)c. (Act 2019-392, §2.)

Ala. Code § 40-18-371 Requirements for Receipt of Incentives.

40-18-371. Requirements for Receipt of Incentives. For a company to receive one or both of the jobs act incentives provided in this article, all of the following shall occur: (1) There must be a qualifying project predominantly conducting an activity specified in Section 40-18-372(1); (2) The qualifying project shall create at least the number of new jobs specified in Section 40-18-372(2); (3) The company proposing the qualifying project must be an approved company, as provided in Section 40-18-373; (4) The approved company and the Governor must enter into a project agreement, as provided in Section 40-18-374; (5) If the incentivized company is allowed a jobs credit, the proof of wages actually paid shall have been delivered and certified, as provided in Section 40-18-375; and (6) If the incentivized company is allowed an investment credit, the proof of capital actually invested shall have been delivered and certified, as provided in Section 40-18-376. (Act 2015-27, p. 103, §3; Act 2017-442, §2(b)(8), 2(b)(9).)

Ala. Code § 40-18-372 Qualifying Projects - Activities and Standards.

40-18-372. Qualifying Projects - Activities and Standards. A qualifying project must be found by the Secretary of Commerce to conduct an activity specified in subdivision (1) and to meet the minimum standard set forth in subdivision (2). (1) A qualifying project must predominantly conduct an activity that is any one or more of the following: a. Described by NAICS Code 1133, 115111, 2121, 22111, 221330, 31 (other than 311811), 32, 33, 423, 424, 482, 4862, 48691, 48699, 48819, 4882, 4883 (other than 48833), 493, 5121 (other than 51213), 5122, 513, 517, 518 (without regard to the premise that data processing and related services be performed in conjunction with a third party), 51929, 52232, 54133 (if predominantly in furtherance of another activity described in this article), 54134 (if predominantly in furtherance of another activity described in this article), 54138, 5415, 541614, 5417, 55 (if not for the production of electricity), 561422 (other than establishments that originate telephone calls), 562213, 56291, 56292, 611512, 927, or 92811. b. The production of biofuel as such term is defined in Section 2-2-90(c)(2). c. A renewable energy generation facility that is owned by one or more electric providers, as the term is defined in Section 37-16-3, for providing electric service at retail in Alabama. For purposes of this subdivision, an “electric provider” shall also include an authority as defined in Section 11-50A-1. In the case of an electric provider that is also a tax-exempt organization under the 26 U.S.C. § 501, notwithstanding Section 40-18-376(b)(3), any investment credit may be transferred for the entire term of the project agreement, as approved by the Governor. A “renewable energy generation facility” as used in this paragraph shall include any tangible property that is part of renewable energy generation, including any addition, modification, expansion, or upgrade to transmission or distribution systems that is required to accommodate the interconnection of renewable energy generation. d. The conduct of original investigations undertaken on a systematic basis to gain new knowledge or the application of research findings or other scientific knowledge to create new or significantly improved products or processes. e. The national or regional headquarters for a company that conducts significant business operations outside the state and that will serve as the principal office of the company’s principal operating officer with chief responsibility for the daily business operations of the company. f. A target of the state’s economic development efforts pursuant to the comprehensive economic development plan, CatALyst, or any amended version or successor document thereto. g. A type listed in a rule adopted by the Department of Commerce, other than an emergency rule. Notwithstanding the foregoing, a qualifying project may not engage predominantly in farming activities involving trees, animals, or crops, and a qualifying project may not engage predominantly in the retail sale of tangible personal property or services, and may not be a shopping center, restaurant, movie theater, bowling alley, fitness center, miniature golf course, nightclub, gaming facility, or establishment serving the local community. However, if the excluded activities are not the predominant activity at the project, and if the project is otherwise a qualifying project, then the project agreement may provide that the capital investment may include costs related to excluded activities that are ancillary to the primary business conducted as part of the project. This provision shall not be deemed to exclude customer service centers, call centers, or headquarters otherwise allowed by this subdivision. (2) A qualifying project shall create a significant number of new jobs for the area in which the qualifying project shall be located. Absent a finding of extraordinary circumstances by the Secretary of Commerce, a qualifying project shall employ either of the following number of new employees: a. Any number of new employees for a qualifying project in which the predominant activity involves chemical manufacturing, data centers, renewable energy generation, engineering, design, or research, metal/machining technology or toolmaking; or b. At least 50 new employees for all other qualifying projects. (Act 2015-27, p. 103, §3; Act 2023-34, §2; Act 2026-550, §1.)

Ala. Code § 40-18-373 Approved Companies.

40-18-373. Approved Companies. In order for a company to be an approved company, all of the following shall occur: (1) For any company that proposes a qualifying project, the Secretary of Commerce shall make all of the following findings: a. That the project is in fact a qualifying project; b. That the qualifying project will not decrease, directly or indirectly, Alabama’s exports; and c. That the amount of tax incentives sought are exceeded by anticipated revenues for the state, including income, property, business privilege, utility, gross receipts, sales, and use tax revenues that are generated by the economic activity resulting from the project, as they arise from the following aspects of the qualifying project: 1. Construction activities related to the qualifying project; 2. The purchase of building materials and the initial equipping of the qualifying project; 3. The subsequent equipping of the qualifying project; and 4. The operation of the qualifying project. (2) Upon making affirmative findings on the criteria set forth in subdivision (1) that are applicable, the Secretary of Commerce shall recommend to the Governor that the company be designated as an approved company. The name of the company and information collected about it shall be forwarded to the Governor. (3) After reviewing the information provided by the Secretary of Commerce, the Governor shall also determine whether the company meets the criteria set forth in subdivision (1). If the Governor makes such a finding, the company shall be an approved company. (Act 2015-27, §3.)

Ala. Code § 40-18-374 Claiming of Incentives; Project Agreement; Amounts and Durations of Incentives.

40-18-374. Claiming of Incentives; Project Agreement; Amounts and Durations of Incentives. (a) An incentivized company may claim either or both of the jobs act incentives, to the extent provided in the project agreement. (b) In order for an incentivized company to claim the jobs act incentives, the Governor and the incentivized company shall execute a project agreement. The agreement shall contain all of the following: (1) The name of the incentivized company. (2) The location of the qualifying project. (3) The activity to be conducted at the qualifying project. (4) The jobs act incentives to be granted. (5) The capital investment to be made at the qualifying project. (6) The time period for the capital investment to be made at the qualifying project. (7) The number of employees at the qualifying project. (8) The anticipated wages to be paid to or for the benefit of employees during the incentive period for the jobs created. (9) The dates or conditions that shall begin the running of the incentive periods for applicable jobs act incentives. (10) The lengths of the incentive periods for the jobs act incentives. (11) Any annual or aggregate limitations on the amount of either or both of the jobs act incentives that can be claimed during an incentive period. (12) Provisions governing the recapture of all or part of the jobs act incentives awarded to the qualifying project, should the approved company default on its obligations in the project agreement. (13) Whether the project agreement may be assigned by the approved company to some other purchaser, assignee, or successor. (14) Any other terms, conditions, and limitations that this article or the Governor may require for an incentivized company to qualify for and receive a jobs act incentive. (15) Any other terms the parties deem necessary or desirable. (c) The Governor may decrease the amounts and durations of the jobs act incentives to ensure that the anticipated revenues for the state will exceed the amount of tax incentives sought. (Act 2015-27, p. 103, §3; Act 2023-34, §2.)

Ala. Code § 40-18-375 Jobs Credit Against Utility Taxes; Realization of Benefits; Rulemaking Authority.

40-18-375. Jobs Credit Against Utility Taxes; Realization of Benefits; Rulemaking Authority. (a)(1) If provided for in the project agreement and in accordance with the terms therein, the incentivized company is allowed a jobs credit against utility taxes, in an annual amount up to 3 percent of the wages paid to eligible Alabama resident employees during the prior year. The incentive period shall be not exceed 10 years. (2) If the incentivized company is engaged in pharmaceutical, biomedical, medical technology, or medical supplies manufacturing, or its related research and development activities, the incentivized company is allowed a jobs credit against utility taxes, in an annual amount up to four percent of the wages paid to Alabama resident employees during the prior year. The incentive period shall not exceed 10 years. This applies to companies that predominantly conduct an activity described by NAICS code 3254, 339112, or 339113, to include related research and development. (b) The project agreement shall provide that one of the following methods shall be used to realize the benefits of the jobs credit: (1)a. As further provided in the project agreement, the jobs credit may be paid to the incentivized company as a refund out of utility taxes during the incentive period, regardless of the amount of utility taxes actually paid by the incentivized company. b. For each year of the incentive period for the jobs credit, the incentivized company shall submit to the Department of Commerce a certification as to the wages paid to employees during the prior year. Following such examination as it deems necessary, the Department of Commerce may certify the information and deliver the same to the Department of Revenue. Thereafter, the Department of Revenue shall calculate the correct refund and issue it directly to the incentivized company. (2)a. The jobs credit may be claimed as a credit against utility taxes actually paid until April 20, 2023, after which time the provisions of subdivision (1) shall control, and the offset provided in this subdivision shall cease unless the provisions stated in subdivision (b)(1) are explicitly stated in the project agreement that was executed prior to April 20, 2023. In any one year, if the credit exceeds the amount of taxes that are allowed to be offset by the project agreement and that are owed by the incentivized company, the incentivized company may carry the credit forward, to the extent allowed in the project agreement. No carryforward shall be allowed for more than five years. Rules similar to those used for Section 40-18-15.2 shall be applied. b. Prior to claiming the jobs credit as provided in this subdivision, the incentivized company shall submit to the Department of Commerce a certification as to the wages paid to employees during the prior year. Following such examination as it deems necessary, the Department of Commerce may certify the information and deliver same to the Department of Revenue. Thereafter, the Department of Revenue shall allow the jobs credit. (c) The realization methods in subsection (b) shall not create debts of the state within the meaning of Section 213 of the Constitution of Alabama of 2022. (d) The Department of Finance shall adopt rules to ensure that the credit in no case would reduce the distribution for the Alabama Special Mental Health Trust Fund by using any unencumbered funds. (Act 2015-27, p. 103, §3; Act 2021-2, §1; Act 2023-34, §2.)

Ala. Code § 40-18-376 Investment Credit; Realization Methods; Rulemaking Authority.

40-18-376. Investment Credit; Realization Methods; Rulemaking Authority. (a) If provided for in the project agreement, the incentivized company is allowed an investment credit in an annual amount up to 1.5 percent of the capital investment incurred as of the beginning of the incentive period, to be used as follows: (1) To offset the income taxes found in this chapter, or as an estimated tax payment of income taxes; (2) To offset the financial institution excise tax found in Chapter 16; (3) To offset the insurance premium tax levied by Section 27-4A-3(a), or as an estimated payment of insurance premium tax; (4) To offset utility taxes; (5) To offset state license taxes levied by Article 2 of Chapter 21; or (6) To offset some combination of the foregoing, so long as the same credit is used only once. The incentive period shall begin no earlier than the placed-in-service date. The incentive period shall not exceed 10 years. (b) A project agreement may specify any one or more of the following methods by which the investment credit shall be realized by the incentivized company, so long as a credit is not utilized more than once: (1)a. The investment credit may be claimed as a credit against the taxes in subsection (a) that are actually paid. In any one year, if the credit exceeds the amount of taxes that are allowed to be offset by the project agreement and that are owed by the incentivized company, the incentivized company may carry the credit forward, to the extent allowed in the project agreement. No carryforward shall be allowed for more than five years. Rules similar to those used for Section 40-18-15.2 shall be applied. b. Prior to claiming the investment credit as provided in this subdivision, the incentivized company shall submit to the Department of Commerce a certification as to its capital investment as of the dates specified in the project agreement. Following such examination as it deems necessary, the Department of Commerce may certify the information and deliver the same to the Department of Revenue. Thereafter, the Department of Revenue shall allow the investment credit. (2) The project agreement may authorize an incentivized company that is taxed as a flow-through entity to allocate the credit among some or all of the owners in any manner specified, regardless of whether the allocation follows rules similar to 26 U.S.C. § 704(b) and the regulations thereunder. The owners may then use their allocated share of the investment credit to offset any of the taxes listed in subsection (a), as provided in subdivision (1). This subdivision shall be liberally construed to apply to multiple levels of companies, to allow the investment credits to be used by those persons bearing the tax burdens of the qualifying project, and such companies shall include but shall in no way be limited to flow-through entities, employee stock ownership plans, mutual funds, and real estate investment trusts, and it shall also apply to offset the income tax liability of employee/owners of a flow-through entity owned by an employee stock ownership plan trust. (3) The Secretary of Commerce may recommend to the Governor that the incentivized company be granted transferability of the investment credit for up to the first five years. Any investment credit transferred shall be at the value of at least 85 percent of the value of the credit. Any one year’s investment credit shall not be purchased by more than three transferees, unless such limitation is found by the Secretary of Commerce to unnecessarily limit the class of potential transferees. If approved by the Governor, transferability shall be allowed in the project agreement, subject to any notice and verification requirements determined by the Department of Commerce. Prior to any transfer, the investment credit shall be certified by the Department of Commerce pursuant to paragraph (b)(1)b. of this section. The Department of Revenue shall adopt a transfer statement form to be filed by the transferor in a manner prescribed by the Department of Revenue. The transfer statement form shall include the name and federal taxpayer identification number of the transferor and each transferee listed therein along with the amount of the tax credit to be transferred to each transferee listed on the form. The transfer statement form shall also contain such other information as the Department of Revenue may reasonably require. For each transfer of a credit, the incentivized company shall file with the Department of Revenue, and a copy to the Department of Commerce: (i) A completed transfer statement form; (ii) a copy of the investment credit certification issued by the Department of Commerce; and (iii) a copy of the executed transfer agreement. Filing of the executed transfer agreement with the Department of Revenue shall perfect the transfer with respect to the transferee, and the Department of Revenue shall thereafter allow the appropriate amount of the investment credit to offset the tax liability of the transferee for any of the taxes listed in subsection (a) and, for any project agreements entered into after January 1, 2021 only, state license taxes levied by Article 2 of Chapter 21. In any one year, if the investment credit exceeds the amount of taxes that are allowed to be offset and that are owed by the transferee, the transferee may carry the credit forward for five years. A transferee may not make a subsequent transfer of the credit. The Department of Revenue may adopt rules necessary to implement and administer the transfer provisions as provided in this article. If a credit is transferred, an incentivized company that is later determined by the Secretary of Commerce to have defaulted under the project agreement shall be liable for the underpayment of tax attributable to the credit and for penalties and interest thereon. Unless the purchase of the credits is determined to have been made in a fraudulent manner, or is a transfer in anticipation of bankruptcy, insolvency, or closure, a transferee shall not be liable for the unpaid tax attributable to the credit, or for penalties or interest thereon. (c) The realization methods in subsection (b) shall not create debts of the state within the meaning of Section 213 of the Constitution of Alabama of 2022. (d)(1) To the extent the investment credit is used to offset a financial institution excise tax liability, in making the report required by Section 40-16-6(d), the financial institution receiving the investment credit shall not take into account the qualifying project, and the Department of Finance shall adopt rules to ensure that the credit in no case would reduce the distribution for municipalities and counties. (2) To the extent the investment credit is used to offset an insurance premium tax liability, the Department of Finance shall adopt rules to ensure that the credit would in no case reduce the distributions to the Alabama Special Mental Health Trust Fund by using any unencumbered funds. (3) To the extent the investment credit is used to offset liability for the tax imposed by Section 40-21-82 or Article 2 of Chapter 21, the Department of Finance shall adopt rules to ensure that the credit in no case would reduce the distribution for the Alabama Special Mental Health Trust Fund by using any unencumbered funds. (Act 2015-27, p. 103, §3; Act 2019-392, §3; Act 2021-2, §1; Act 2021-423, §2; Act 2023-34, §2.)

Ala. Code § 40-18-376.1 Projects in Targeted or Jumpstart Counties.

40-18-376.1. Projects in Targeted or Jumpstart Counties. (a) As used in this section, the following terms have the following meanings: (1) JUMP START COUNTY. Any Alabama county that meets all the following: a. Does not qualify as a targeted county. b. Has experienced negative population growth over the last five years as determined by the Commissioner of Labor as of each January 1 using the most current data available from the United States Departments of Labor or Commerce, the United States Bureau of the Census, or any other federal or state agency or department. c. Contains no more than two opportunity zones as they existed on June 1, 2019. (2) TARGETED COUNTY. Any Alabama county that has a population of 60,000 or less, as determined by the Commissioner of Labor as of each January 1 using the most current data available from the United States Departments of Labor or Commerce, the United States Bureau of the Census, or any other federal or state agency or department. (b) In making the findings required by Section 40-18-373, a company that proposes a qualifying project in a targeted or jumpstart county shall be an approved company for purposes of this section only if the Secretary of Commerce makes the additional finding that the qualifying project will increase the economic diversity of, or otherwise benefit, the targeted or jumpstart county. (c) For purposes of determining in Section 40-18-372(2)b. whether a qualifying project may receive the jobs act incentives, a project to be located in a targeted or jumpstart county shall employ at least 10 new employees and shall involve, directly or indirectly, at least two million dollars ($2,000,000) of capital, absent a finding of extraordinary circumstances by the Secretary of Commerce. (d) If the qualifying project is located in a county which is deemed to be a targeted or jumpstart county on the date the project agreement is executed, the following shall be applicable: (1) The jobs credit provided in Section 40-18-375(a) shall be up to 4.0 percent of the wages paid to Alabama resident employees during the prior year; and (2) The investment credit provided in Section 40-18-376(a) shall have an incentive period not to exceed 15 years. (e) Each year, the incentives in subsection (d) may be extended to no more than two qualifying projects not in targeted or jumpstart counties. Such incentives shall be granted in project agreements executed by the Governor on the recommendation of the Secretary of Commerce. (Act 2015-41, p. 146, §3; Act 2017-442, §1(b)(10); Act 2019-392, §3; Act 2023-34, §2.)

Ala. Code § 40-18-376.2 Additional Jobs Credit for Employment of Veterans.

40-18-376.2. Additional Jobs Credit for Employment of Veterans. (a) The provisions in this section shall apply to the following: (1) Any incentivized company that employed, in the prior year, at least 12 percent of its employees as veterans who received an honorable or general discharge. (2) Any incentivized company with a qualifying project located within a former active duty military installation closed by the Base Realignment and Closure process. (b)(1) Any incentivized company described by subdivision (a)(1) shall receive an additional 0.5 percent jobs credit provided in Section 40-18-375(a) on the wages paid during the prior year to Alabama resident employees who are veterans. (2) Any incentivized company described by subdivision (a)(2) shall receive an additional 0.5 percent jobs credit provided in Section 40-18-375(a) on the wages paid during the prior year to Alabama resident employees. (c) No incentivized company claiming the credit provided by subdivision (b)(1) shall also claim the credit provided by Article 13 of this chapter for any portion of the project. (d) The Department of Labor shall periodically verify the actual number of veterans employed by the incentivized company described in subdivision (a)(1) and the wages of the veterans during the relevant year. If the Department of Labor is not able to provide the verification utilizing all available resources, it may request any additional information from the incentivized company as may be necessary. (Act 2015-41, p. 446, §3; Act 2016-321, p. 799, §1; Act 2023-34, §2.)

Ala. Code § 40-18-376.3 Qualifying Projects by Technology Companies.

40-18-376.3. Qualifying Projects by Technology Companies. (a)(1) This section shall be applicable to a technology company so long as there is a project agreement which provides that Alabama is or will become the company’s headquarters, the place of residence of its top three executives, and the place of residence of at least 75 percent of its employees. (2) In making the findings required by Section 40-18-373(1), a technology company that proposes a qualifying project shall be an approved company for purposes of this section only if the Secretary of Commerce makes the additional finding that the qualifying project will increase the economic diversity of, or otherwise benefit, the state. (3) A qualifying project shall be deemed to be in existence, notwithstanding the requirements of Section 40-18-372, so long as at least 10 new employees are employed at the qualifying project, absent a finding of extraordinary circumstances by the Secretary of Commerce. (b) If provided for in the project agreement, the following shall be allowed to any company which meets all the criteria in subsection (a): (1) A jobs credit against utility taxes in an annual amount up to 4 percent of the wages paid to Alabama resident employees during the prior year. The incentive period shall not exceed 10 years. (2) An investment credit as provided in Section 40-18-376. (c) A “technology company” is any company that meets all the criteria in subdivision (1) or (2): (1) A company that earns at least 75 percent of its revenues from either of the following: a. Activities within subsector 518; industry group 5112, 5121 (other than 51213), 5415, or 5417; or industry 51913 of the 2012 North American Industry Classification System, or any similar classification system developed in conjunction with the United States Department of Commerce or Office of Management and Budget. b. The use of technology to develop new coding or processes for the creation or delivery of goods or services in the following fields, or any additional activities determined by the Secretary of Commerce to be beneficial to the enhancement of businesses rooted in either of the following fields: 1. Any of the fields of education, healthcare, energy, agriculture, infrastructure, software, robotics, nutrition, aerospace, automotive, or financial services. 2. Any fields related to science, technology, engineering, or mathematics. (2) A company that, for a fixed term, educates and mentors early-stage technology companies recruited to a location in Alabama, with the goal of accelerating the companies’ development and growth. (Act 2019-392, §5; Act 2021-2, §1; Act 2023-34, §2.)

Ala. Code § 40-18-376.4 Qualifying Projects by Underrepresented Companies.

40-18-376.4. Qualifying Projects by Underrepresented Companies. (a) This section shall be applicable to an underrepresented company, as defined in this section. In making the findings required by Section 40-18-373(1), an underrepresented company that proposes a qualifying project shall be an approved company for purposes of this section only if the Secretary of Commerce makes the additional finding that the qualifying project will increase economic diversity and will benefit the state. (b) If provided for in the project agreement, the following shall be allowed to any company that meets all of the criteria in subsection (a): (1) Absent a finding of extraordinary circumstances by the Secretary of Commerce, a qualifying project shall be deemed to be in existence notwithstanding the requirements of Section 40-18-372 so long as 10 new jobs are created. (2) A jobs credit against utility taxes, in an annual amount up to 4 percent of the wages paid to Alabama resident employees during the prior year. (3) The investment credit provided in Section 40-18-376(a) shall have an incentive period not to exceed 15 years. (c) An “underrepresented company” is any company that meets all the criteria in subdivision (1) or (2): (1) The company is a for-profit business headquartered in a community eligible for investment through the federal New Markets Tax Credit program under 26 U.S.C. § 45D(e) as those communities were identified as of January 1, 2015, or in such a community identified thereafter, has fewer than 10 employees at the time the project agreement is executed, and has average gross revenues of less than five hundred thousand dollars ($500,000) in the company’s three years prior to the execution of the project agreement; or (2) The company is a for-profit business that is independently owned and controlled and is at least 51 percent owned and controlled by one or more underrepresented persons or, in the case of a publicly-owned business, the company is a for-profit business of which at least 51 percent of the stock is owned and controlled by one or more underrepresented persons and whose daily management and operations are under the control of one or more underrepresented persons. As used herein, an “underrepresented person” is a United States citizen who is a woman or is African American. (Act 2021-2, §10; Act 2023-34, §2; Act 2024-441, §1.)

Ala. Code § 40-18-377 Project Agreements Forwarded to Department of Revenue; Incentives Not Deemed Securities; Disclosure, Use, and Dissemination of Information.

40-18-377. Project Agreements Forwarded to Department of Revenue; Incentives Not Deemed Securities; Disclosure, Use, and Dissemination of Information. (a) After its execution, the Department of Commerce shall forward to the Department of Revenue a copy of any project agreement that allows an incentivized company to claim a jobs act incentive. (b) Jobs act incentives shall not be considered securities under Section 8-6-2(10). (c) The acceptance of a tax credit under this article shall constitute approval and written consent by the taxpayer to disclose to the Secretary of Commerce the total tax liability, net operating loss, amount of credit claimed, recipient of the credit, and any transferor and transferee information. The Department of Revenue shall disclose the information to the Department of Commerce upon written request by the Secretary of Commerce. The information shall be limited to what is necessary to administer this article. Upon receipt of this information, Section 40-2A-10 shall apply to the Department of Commerce and its employees with respect to the use, dissemination, or other handling of the information. (Act 2015-27, §3; p. 103, Act 2023-34, §2.)

Ala. Code § 40-18-378 Verification of Employment Numbers; Audits; Return of Unearned Credit Amounts; Liability of Incentivized Companies.

40-18-378. Verification of Employment Numbers; Audits; Return of Unearned Credit Amounts; Liability of Incentivized Companies. (a) The Department of Labor shall periodically verify the actual number of employees employed at the qualifying project and the wages of the employees during the relevant year. If the Department of Labor is not able to provide the verification utilizing all available resources, it may request any additional information from the incentivized company as may be necessary. The Department of Revenue may periodically audit any incentivized company to monitor compliance by the incentivized company with this article. Nothing in this article shall be construed to limit the powers otherwise existing for the Department of Revenue to audit and assess an incentivized company. The Department of Insurance shall have similar audit rights over any incentivized company that is subject to the insurance premium tax. (b) The project agreement shall include provisions for the incentivized company to return any unearned credit amounts. (c)(1) An incentivized company shall be liable for any unearned portion of the jobs credit or investment credit it claims or transfers pursuant to this article. The jobs credit will be considered unearned when the incentivized company fails to pay the full amount of wages or create the full number of jobs upon which the credit was based and claimed. The investment credit will be considered unearned when the incentivized company fails to make the full capital investment upon which the credit was based and claimed or upon which the credit was valued and then transferred. The incentivized company shall be liable for only that portion of the jobs credit or investment credit that was unearned. Any credit claimed by an owner of an incentivized company is deemed to have been claimed by the incentivized company for purposes of this subsection. (2) The Secretary of Commerce may report to the Department of Revenue any failure of an incentivized company to meet the jobs, wage, or investment requirements specified in the project agreement. The report will be made by March 31 of the year following the calendar year in which the failure occurs and shall contain sufficient information for the Department of Revenue to calculate the unearned portion of the jobs credit or investment credit. The underpayment of the applicable tax will be deemed to have occurred upon the filing of the report. The report shall be treated as the filing of a return by the incentivized company for purposes of any applicable period of limitation. (3) The Department of Revenue may assess an incentivized company for any unearned portion of the investment credit or jobs credit, with allowed interest and penalties, pursuant to the terms of Chapter 2A or Chapter 29. The liability shall be considered an underpayment of the tax against which the respective credit was applied or refunded. (4) If more than one company is considered the incentivized company under the terms of the project agreement, each such company will be jointly and severally liable for any liability associated with the unearned credit. (d) Notwithstanding the provisions of subsection (c), no credit authorized under this article shall be approved and issued prior to the credit being earned. (Act 2015-27, p. 103, §3; Act 2023-34, §2.)

Ala. Code § 40-18-379 Joint Legislative Advisory Committee on Economic Incentives.

40-18-379. Joint Legislative Advisory Committee on Economic Incentives. (a) There is hereby created a permanent Joint Legislative Advisory Committee on Economic Incentives, hereinafter referred to as the committee. (b) The committee shall be comprised of all of the following persons: (1) The chairs of the House Ways and Means General Fund and Education Fund committees. (2) The chairs of the Senate Finance and Taxation General Fund and Education Fund committees. (3) The Speaker of the House, or his or her designee, and two members of the House of Representatives to be appointed by the Speaker of the House. (4) The President Pro Tempore of the Senate, or his or her designee, and the chair of the Senate Committee on Fiscal Responsibility and Economic Development or its successor committee, if any. (5) One member of the Senate to be appointed by the President Pro Tempore of the Senate. (c)(1) The committee shall hold an organizational meeting by August 1, 2015, and shall therein elect a chair and vice chair from among its members. Thereafter, the committee shall meet at the call of the chair or any majority of members thereof; provided that the committee shall meet at least two times annually. Other than the organizational meeting, such meetings shall be held with the Secretary of Commerce in attendance, or his or her designee. The committee may meet, act, and conduct its business during the sessions of the Legislature or any recess thereof, and in the interim period between sessions. (2) Beginning July 1, 2023, in the first year of each quadrennium, the committee shall elect from its membership a chair and vice-chair, which shall rotate between members from the House and Senate. The chair shall be elected from the House and the vice-chair from the Senate to serve the first two years of each quadrennium. Beginning with the third January 1 of the quadrennium and to serve for the remainder of the quadrennium, the vice-chair shall become the chair, and the chair shall become the vice-chair. If the chair becomes vacant, the vice-chair shall serve as chair until a replacement chair is elected. An election to fill a vacancy of the chair or vice-chair shall occur at the next meeting of the committee. (d) The committee shall adopt its own rules of procedure for the transaction of committee business, and a majority of the members present shall constitute a quorum for the purpose of transacting or performing authorized duties. (e) The committee shall monitor and evaluate the management process and standards used by the Department of Commerce in the development of project agreements and in the awarding of economic development incentives as authorized by the laws of this state. The committee may provide recommendations to the Secretary of Commerce regarding the same and shall act in an advisory role only. Such recommendations may include certain identified minimum standards to be set forth in project agreements and otherwise in the awarding of economic development incentives, as well as recommendations regarding the recruitment of certain industries to the various geographic regions of the state. The committee may also request from the Department of Commerce specific, non-confidential information on successfully negotiated and executed project agreements as well as non-confidential information on unsuccessful project agreement negotiations. (f) The Department of Commerce shall provide to the committee, upon request, an aggregated list of the amounts and types of economic development incentives awarded, as well as an analysis of the cost and benefits of the incentives awarded. The Department of Revenue shall assist the Department of Commerce in the calculations required in this section. (g) The Department of Commerce, the Department of Revenue, and the Department of Finance shall collectively report, no later than January 1 of each year, the aggregate amount of incentives committed by tax source on executed project agreements during the past fiscal year. Nothing in this subsection shall require or authorize the disclosure of any individual taxpayer or taxpayer identifying information. (h)(1) The committee may request that a third-party evaluation be conducted assessing the impacts of state economic development incentives, in the form of an annual Executive Report. The committee shall designate the third party and shall determine the form and contents of the Executive Report, that may include historical economic incentives. (2) The Department of Commerce, the Department of Revenue, and the Department of Labor shall cooperate with, and timely provide requested nonconfidential information to, the chosen third party conducting the evaluation. (3) An Executive Report provided to the committee pursuant to this subsection shall not be considered a public record under Article 3 of Chapter 12 of Title 36. (i) The committee shall make an annual report of its findings and recommendations to the Legislature during each regular session, and in its discretion may submit additional reports from time to time, or at any time. (j) In no event shall the Department of Commerce be required to disclose matters which would cause it to violate any nondisclosure agreement executed for a project. In no event shall the Department of Commerce be required to disclose matters which would cause the State of Alabama to be at a competitive disadvantage in ongoing or future project negotiations. The Department of Commerce shall not be required under this article to disclose confidential information to the committee that involves ongoing project negotiations. (k) Meetings of the committee are exempt from Chapter 25A of Title 36, provided that the minutes of each meeting shall be made available for public inspection. In order to balance the privacy needs of economic development negotiations with openness to the public, the committee may use code names in its deliberations about various applicants and in the minutes of its proceedings. (l) The membership of the committee shall be inclusive and shall reflect the racial, gender, geographic, urban/rural, and economic diversity of the state. (m) Upon request of the chair, the Secretary of the Senate and the Clerk of the House shall provide clerical assistance as the committee requires. (Act 2015-27, p. 103, §3; Act 2023-36, §1.)

Ala. Code § 40-18-379.1 Publication of Certain Information Regarding Economic Development Incentives Awarded Under the Alabama Jobs Act.

40-18-379.1. Publication of Certain Information Regarding Economic Development Incentives Awarded Under the Alabama Jobs Act. The Department of Commerce shall publish all of the following information on its website: (1) For each project incentivized under this article: a. The name of the incentivized company. b. The county of the qualifying project. c. The estimated capital investment. d. The estimated number of new jobs. e. The estimated average hourly wage. f. The estimated value of the jobs credit. g. The estimated value of the investment credit. h. The projected 10-year and 20-year return on incentives. i. The value of any cash incentive that was committed. (2) Aggregated performance data on all projects incentivized under this article. (Act 2023-36, §2)

Ala. Code § 40-18-380 Implementation of Article.

40-18-380. Implementation of Article. (a) The Departments of Commerce, Labor, Insurance, Revenue, and Finance shall implement this article, exercise all powers as authorized in this article, and promulgate regulations to implement and administer the provisions of this article. b) All filings made by a private party with any department of the state government shall be made using forms promulgated by such department. Any such filing shall be treated as a tax return, subject to penalties imposed by the Department of Revenue. (Act 2015-27, §3.)

Ala. Code § 40-18-381 Construction of Article.

40-18-381. Construction of Article. (a) Nothing in this article shall be construed to constitute a guarantee or assumption by the state of any debt of any company nor to authorize the credit of the state to be given, pledged, or loaned to any company. (b) The provisions of this article shall not be construed in a manner adverse to the validity of any jobs act incentives. (c) Nothing in this article shall be construed to make available to any company any right to the jobs act incentives absent strict compliance with this article. (Act 2015-27, §3.)

Ala. Code § 40-18-382 Continuation or Reinstatement of Incentives.

40-18-382. Continuation or Reinstatement of Incentives. The incentives authorized by this article shall not be available for qualifying projects for which project agreements have not been executed on or prior to July 31, 2028, unless the Legislature enacts legislation to continue or reinstate the incentives for new projects after that date. No action or inaction on the part of the Legislature shall reduce or suspend any incentive awarded pursuant to this article in any past or future calendar year with respect to qualifying projects for which project agreements have been executed on or prior to July 31, 2028, it being the sole intention of this section that failure of the Legislature to enact legislation continuing the incentives authorized by this article for periods after July 31, 2028, shall affect only the availability of the incentives to qualifying projects for which project agreements have not been executed on or prior to July 31, 2028, and shall not affect qualifying projects for which project agreements have been executed on or prior to July 31, 2028. (Act 2015-27, p. 103, §5; Act 2017-314, §1; Act 2021-2, §1; Act 2023-34, §2.)

Ala. Code § 40-18-383 Maximum Balance of Outstanding Incentives; Availability of Incentives to Qualifying Projects.

40-18-383. Maximum Balance of Outstanding Incentives; Availability of Incentives to Qualifying Projects. (a) At no time prior to the calendar year ending December 31, 2021, shall the annualized balance of the outstanding jobs act incentives exceed three hundred fifty million dollars ($350,000,000), which amount shall increase to three hundred seventy-five million dollars ($375,000,000) for the calendar year ending December 31, 2023, four hundred million dollars ($400,000,000) for the calendar year ending December 31, 2024, four hundred twenty-five million dollars ($425,000,000) for the calendar year ending December 31, 2025, four hundred fifty million dollars ($450,000,000) for the calendar year ending December 31, 2026, and four hundred seventy-five million dollars ($475,000,000) for the calendar year ending December 31, 2027, unless the Legislature enacts legislation to allow additional jobs act incentives. Of the above annualized balance, twenty million dollars ($20,000,000) shall apply to qualifying projects located in targeted or jumpstart counties as described in Section 40-18-376.1. (b) Jobs act incentives under this article shall not be available for any qualifying project unless at least 80 percent of the employees created by the qualifying project are employed full time. (Act 2015-27, p. 103, §§6, 7; Act 2017-314, §§1,2; Act 2021-2, §1; Act 2023-34, §2.)

Ala. Code § 40-18-384 Specific Industrial or Research Enterprises; Amounts and Durations of Incentives; Fees for Amendments to Project Agreements.

40-18-384. Specific Industrial or Research Enterprises; Amounts and Durations of Incentives; Fees for Amendments to Project Agreements. (a) Both of the following shall be considered industrial or research enterprises for purposes of Chapter 9B of this Title 40, approved activities for purposes of Chapter 9G of this Title 40, and qualifying projects for purposes of Article 16 of Chapter 18 of this Title 40: (1) Any trade or business predominately consisting of an activity described in Section 40-18-376.3(c). (2) The agricultural center described in Section 40-18-417(a)(2)b. (b) The agricultural center is allowed the investment credit as provided in Section 40-18-376 for a period not to exceed 10 years. (c) For purposes of Article 16 of Chapter 18 of Title 40, the Governor may decrease the amounts and durations of the jobs act incentives. The Department of Commerce may charge fees for amendments to project agreements entered into under Article 16 of Chapter 18 of Title 40. (d) As to the agricultural center described in Section 40-18-417(a)(2)b., all of the years of the investment credit may be made transferable in the project agreement, using rules similar to those provided in Section 40-18-376(b)(3). (Act 2019-392, §7, Act 2022-371, §1(b)(5).)

Ala. Code § 40-18-385 Implementation and Administration of the Alabama Incentives Modernization Act.

40-18-385. Implementation and Administration of the Alabama Incentives Modernization Act. The departments of Economic and Community Affairs, Revenue, Commerce, and Finance shall implement Act 2019-392, exercise all powers as authorized in Act 2019-392, and adopt rules to implement and administer Act 2019-392. (Act 2019-392, §8.)

Ala. Code § 40-18-386 Reductions of Distribution for Education Trust Fund and General Fund.

40-18-386. Reductions of Distribution for Education Trust Fund and General Fund. Notwithstanding the provisions of Section 40-18-376(d)(2), to the extent the investment credit is used to offset an insurance premium tax liability and a portion of the insurance premium taxes are deposited into the Education Trust Fund, the Department of Finance shall adopt rules to ensure that the credit would reduce the distribution for the Education Trust Fund. Thereafter, the credit will reduce the distributions to the state General Fund only. (Act 2019-392, §11.)

Ala. Code § 40-18-387 Applicability of the Enhancing Economic Progress Act to Service Territories for Electric Suppliers.

40-18-387. Applicability of the Enhancing Economic Progress Act to Service Territories for Electric Suppliers. In no event does Act 2023-34 authorize any electric provider to provide retail electric service outside of its electric service territory as determined under the applicable provisions of Chapter 14 of Title 37. Nothing in Act 2023-34 is intended to amend, repeal, enlarge, or otherwise affect Chapter 14 of Title 37. EndFragment (Act 2023-34, §3.)

Source: Alabama Legislature (alison.legislature.state.al.us)URL: https://alison.legislature.state.al.us/code-of-alabamaFetched: 10/20/2026