Written Managed Review – Arizona Qualified Facility Tax Credit Program

(ESTABLISHED UNDER A.R.S. §41-1512)

Summary

The primary goal of the Qualified Facility Tax Credit program is to stimulate the creation or expansion of manufacturing facilities, including manufacturing-related research and development or headquarters facilities. The program accomplishes this goal by providing a refundable Arizona income tax credit to qualified applicants.

The tax credit is equal to the lesser of either:

• 10% of the total qualified investment made at the facility; or
• $20,000 per qualified job created at the facility; or
• $30,000,000 per taxpayer.

Program Qualifications

To qualify for program benefits, a company must:

• Invest in the location of or expansion of a Qualified Facility in Arizona. Measured by both the payroll and square footage of the facility, the qualified facility must be dedicated (80% or more) to manufacturing or manufacturing-related R&D or headquarters.
• Create net new full-time employment positions at the Facility of which at least 51% must be paid at least 125% of the Arizona median production wage if the Facility is in an urban area, or 100% of the median production wage if the Facility is in a rural area. Net new positions must be:
  • Permanent with a minimum of 1,750 hours per year.
  • Maintained for at least 90 days as of the date of Post-Approval and not be vacant for a cumulative period of time exceeding 150 days following the creation of the position.
  • Filled by an employee who has NOT been previously employed by the company within 12 months before the current date of hire.
• Offer to pay at least 65% of employee’s health insurance premiums or membership cost.

A company who claims a credit under the Military Reuse Zone, Quality Jobs, Renewable Energy Tax Incentive or Healthy Forest Enterprise Incentives Program cannot claim a credit under the Qualified Facility program with respect to the same employment position.

Applying for Tax Credits

The Arizona Commerce Authority (ACA) may authorize up to $70 million per calendar year in tax credits to qualified companies beginning January 2013 through December 2022. The tax credits will be authorized on a first-come, first-served basis, according to a priority placement number assigned by the ACA at the time of pre-approval.

If the company is eligible, the ACA will issue Pre-Approval and reserve tax credits for the applicant. Once the facility “begins operations,” an applicant will need to enter into a Written Managed Review with the ACA and a third-party CPA. Following the managed review, the applicant may apply to the ACA for Post-Approval. If the applicant receives Post-Approval from the ACA, tax credits must be claimed with the Arizona Department of Revenue in five equal annual installments.