Florida Senate - 2010 SB 1992 By Senator Ring 32-01654-10 20101992__ 1 A bill to be entitled 2 An act relating to Florida ports investments; creating 3 s. 311.23, F.S.; providing a short title; providing a 4 purpose; providing definitions; providing requirements 5 for certification to operate as a certified capital 6 company; providing application requirements; providing 7 for an application fee and annual certification 8 renewal fees; providing application review and 9 approval and certification administration and 10 enforcement duties and responsibilities of the 11 Department of Financial Services; providing grounds 12 for denial of certification or decertification; 13 providing for investments by the Office of Tourism, 14 Trade, and Economic Development in port-related 15 activities; specifying allocations for certain port 16 activities and investments; providing requirements for 17 capital allocation and investment; providing for a 18 premium tax credit; providing for carryforward of the 19 credit; providing limitations on the credit; providing 20 limitations on the amount of tax credits; providing 21 requirements for the office to administer the 22 allocation of tax credits; providing requirements and 23 procedures for a credit claim process; providing 24 penalties for perjury for false written declaration 25 involving verification of certain documentation; 26 authorizing the Department of Revenue to conduct 27 audits; providing investment requirements; providing 28 for state participation; providing requirements and 29 procedures for decertification; preserving audit 30 authority of the Chief Financial Officer; providing 31 criteria for deficiency assessments; providing 32 penalties for failure to report and timely pay any tax 33 due; providing for transferability of unused credits; 34 providing a definition; providing reporting 35 requirements; providing for deposit of fees; 36 authorizing the Department of Revenue to adopt rules; 37 authorizing the Office of Tourism, Trade, and Economic 38 Development to adopt rules; providing an effective 39 date. 40 41 Be It Enacted by the Legislature of the State of Florida: 42 43 Section 1. Section 311.23, Florida Statutes, is created to 44 read: 45 311.23 Florida Ports Investment Act.— 46 (1) SHORT TITLE.—This section may be cited as the “Florida 47 Ports Investment Act.” 48 (2) PURPOSE.—The primary purpose of this section is to 49 stimulate a substantial increase in the state’s port 50 infrastructure by providing an incentive for insurance companies 51 to invest in certified port activities in this state which, in 52 turn, will generate investments in new port businesses or in 53 expanding port businesses. The increase in investment capital 54 flowing into new or expanding port activities and businesses is 55 intended to contribute to employment growth, create jobs that 56 exceed the average wage for the county in which the jobs are 57 created, and expand or diversify the economic base of this 58 state. 59 (3) DEFINITIONS.—As used in this section, the term: 60 (a) “Affiliate of an insurance company” means: 61 1. Any person directly or indirectly beneficially owning, 62 whether through rights, options, convertible interests, or 63 otherwise, controlling, or holding power to vote 10 percent or 64 more of the outstanding voting securities or other voting 65 ownership interests of the insurance company; 66 2. Any person 10 percent or more of whose outstanding 67 voting securities or other voting ownership interest is directly 68 or indirectly beneficially owned, whether through rights, 69 options, convertible interests, or otherwise, controlled, or 70 held with power to vote by the insurance company; 71 3. Any person directly or indirectly controlling, 72 controlled by, or under common control with the insurance 73 company; 74 4. A partnership in which the insurance company is a 75 general partner; or 76 5. Any person who is a principal, director, employee, or 77 agent of the insurance company or an immediate family member of 78 the principal, director, employee, or agent. 79 (b) “Certified capital” means an investment of cash by a 80 certified investor in a certified capital company which fully 81 funds the purchase price of either or both its equity interest 82 in the certified capital company or a qualified debt instrument 83 issued by the certified capital company. 84 (c) “Certified capital company” means a corporation, 85 partnership, or limited liability company that: 86 1. Is certified by the office under this section; 87 2. Receives investments of certified capital from two or 88 more unaffiliated certified investors; and 89 3. Makes investments in qualified port businesses as its 90 primary activity. 91 (d) “Certified investor” means any insurance company 92 subject to premium tax liability under s. 624.509 that 93 contributes certified capital. 94 (e) “Department” means the Department of Financial 95 Services. 96 (f) “Office” means the Office of Tourism, Trade, and 97 Economic Development. 98 (g) “Premium tax liability” means any liability incurred by 99 an insurance company under s. 624.509. 100 (h) “Principal” means an executive officer of a 101 corporation, partner of a partnership, manager of a limited 102 liability company, or any other person with equivalent executive 103 functions. 104 (i) “Qualified port business” means the ports and 105 associated facilities listed in s. 403.021(9)(b) which meet the 106 following qualifications: 107 1. The port is headquartered in this state and its 108 principal business operations are located in this state. 109 2. Regional projects use the port’s foreign trade zone for 110 purposes involving manufacturing, processing or assembling of 111 products, or conducting or providing services. 112 3. The port has applied and qualified for investment 113 funding under paragraph (5)(d). 114 (j) “Qualified debt instrument” means a debt instrument, or 115 a hybrid of a debt instrument, issued by a certified capital 116 company, at par value or a premium, with an original maturity 117 date of at least 5 years after the date of issuance, a repayment 118 schedule that is no faster than a level principal amortization 119 over a 5-year period, and interest, distribution, or payment 120 features that are not related to the profitability of the 121 certified capital company or the performance of the certified 122 capital company’s investment portfolio. 123 (k) “Qualified distribution” means any distribution or 124 payment to equity holders of a certified capital company for: 125 1. Costs and expenses of forming, syndicating, managing, 126 and operating the certified capital company, including an annual 127 management fee in an amount that does not exceed 2.5 percent of 128 the certified capital of the certified capital company, plus 129 reasonable and necessary fees in accordance with industry custom 130 for professional services, including, but not limited to, legal 131 and accounting services, related to the operation of the 132 certified capital company; or 133 2. Any projected increase in federal or state taxes, 134 including penalties and interest related to state and federal 135 income taxes, of the equity owners of a certified capital 136 company resulting from the earnings or other tax liability of 137 the certified capital company to the extent that the increase is 138 related to the ownership, management, or operation of a 139 certified capital company. 140 (4) CERTIFICATION; GROUNDS FOR DENIAL OR DECERTIFICATION.— 141 (a) To operate as a certified capital company, a 142 corporation, partnership, or limited liability company must be 143 certified by the department pursuant to this section. 144 (b) An applicant for certification as a certified capital 145 company must file a verified application with the department on 146 or before December 1, 2010, in a form that the department may 147 prescribe by rule. The applicant shall submit a nonrefundable 148 application fee of $7,500 to the department. The applicant shall 149 provide: 150 1. The name of the applicant and the address of its 151 principal office and each office in this state. 152 2. The applicant’s form and place of organization and the 153 relevant organizational documents, bylaws, and amendments or 154 restatements of such documents, bylaws, or amendments. 155 3. Evidence from the Department of State that the applicant 156 is registered with the Department of State as required by law, 157 maintains an active status with the Department of State, and has 158 not been dissolved or had its registration revoked, canceled, or 159 withdrawn. 160 4. The applicant’s proposed method of doing business. 161 5. The applicant’s financial condition and history, 162 including an audit report on the financial statements prepared 163 in accordance with generally accepted accounting principles 164 showing net capital of not less than $500,000 within 90 days 165 after the date the application is submitted to the department. 166 If the date of the application is more than 90 days after the 167 preparation of the applicant’s fiscal year-end financial 168 statements, the applicant may file financial statements reviewed 169 by an independent certified public accountant for the period 170 subsequent to the audit report, together with the audited 171 financial statement for the most recent fiscal year. If the 172 applicant has been in business less than 12 months and has not 173 prepared an audited financial statement, the applicant may file 174 a financial statement reviewed by an independent certified 175 public accountant. 176 (c) On or before December 31, 2010, the department shall 177 grant or deny certification as a certified capital company. If 178 the department denies certification within the time period 179 specified, the department shall inform the applicant of the 180 grounds for the denial. If the department has not granted or 181 denied certification within the time specified, the application 182 shall be deemed approved. The department shall approve the 183 application if the department finds that: 184 1. The applicant satisfies the requirements of paragraph 185 (b). 186 2. No evidence exists that the applicant has committed any 187 act specified in paragraph (d). 188 3. At least two of the principals have a minimum of 5 years 189 of experience making venture capital investments out of private 190 equity funds, with not less than $20 million being provided by 191 third-party investors for investment in the early stage of 192 operating businesses. At least one full-time manager or 193 principal of the certified capital company who has such 194 experience must be primarily located in an office of the 195 certified capital company which is based in this state. 196 (d) The department may deny certification or decertify a 197 certified capital company if the grounds for decertification are 198 not removed or corrected within 90 days after the notice of such 199 grounds is received by the certified capital company. The 200 department may deny certification or decertify a certified 201 capital company if the certified capital company fails to 202 maintain common stock or paid-in capital of at least $500,000, 203 or if the department determines that the applicant, or any 204 principal or director of the certified capital company, has: 205 1. Violated any provision of this section; 206 2. Made a material misrepresentation or false statement or 207 concealed any essential or material fact from any person during 208 the application process or with respect to information and 209 reports required of certified capital companies under this 210 section; 211 3. Been convicted of, or entered a plea of guilty or nolo 212 contendere to, a crime against the laws of this state or any 213 other state or of the United States or any other country or 214 government, including a fraudulent act in connection with the 215 operation of a certified capital company, or in connection with 216 the performance of fiduciary duties in another capacity; 217 4. Been adjudicated liable in a civil action on grounds of 218 fraud, embezzlement, misrepresentation, or deceit; or 219 5.a. Been the subject of any decision, finding, injunction, 220 suspension, prohibition, revocation, denial, judgment, or 221 administrative order by any court of competent jurisdiction, 222 administrative law judge, or any state or federal agency, 223 national securities, commodities, or option exchange, or 224 national securities, commodities, or option association, 225 involving a material violation of any federal or state 226 securities or commodities law or any rule or regulation adopted 227 under such law, or any rule or regulation of any national 228 securities, commodities, or options exchange, or national 229 securities, commodities, or options association; or 230 b. Been the subject of any injunction or adverse 231 administrative order by a state or federal agency regulating 232 banking, insurance, finance or small loan companies, real 233 estate, mortgage brokers, or other related or similar 234 industries. 235 (e) The certified capital company shall file a copy of its 236 certification with the department by January 31, 2011. 237 (f) Any offering material involving the sale of securities 238 of the certified capital company shall include the following 239 statement: “By authorizing the formation of a certified capital 240 company, the State of Florida does not endorse the quality of 241 management or the potential for earnings of such company and is 242 not liable for damages or losses to a certified investor in the 243 company. Use of the word ‘certified’ in an offering does not 244 constitute a recommendation or endorsement of the investment by 245 the State of Florida. Investments in a certified capital company 246 prior to the time such company is certified are not eligible for 247 premium tax credits. If applicable provisions of law are 248 violated, the state may require forfeiture of unused premium tax 249 credits and repayment of used premium tax credits by the 250 certified investor.” 251 (g) An insurance company or any affiliate of an insurance 252 company may not manage or control, directly or indirectly, the 253 direction of investments of a certified capital company. This 254 prohibition does not preclude a certified investor, insurance 255 company, or any other party from exercising its legal rights and 256 remedies, which may include interim management of a certified 257 capital company, if a certified capital company is in default of 258 its obligations under law or its contractual obligations to such 259 certified investor, insurance company, or other party. 260 (h) On or before December 31 of each year, each certified 261 capital company shall pay to the department an annual, 262 nonrefundable renewal certification fee of $5,000. Renewal fees 263 may not be required within 6 months after the date of initial 264 certification. 265 (i) The department shall administer and provide for the 266 enforcement of certification requirements for certified capital 267 companies as provided in this section. The department may adopt 268 any rules necessary to carry out its duties, obligations, and 269 powers related to certification, renewal of certification, or 270 decertification of certified capital companies and may perform 271 any other acts necessary for the proper administration and 272 enforcement of such duties, obligations, and powers. 273 (j) Decertification of a certified capital company under 274 this subsection does not affect the ability of certified 275 investors in the certified capital company from claiming future 276 premium tax credits earned as a result of an investment in the 277 certified capital company during the period in which it was duly 278 certified. 279 (5) INVESTMENTS BY THE OFFICE IN PORT-RELATED ACTIVITIES.— 280 (a)1. The office shall seek to maintain the state’s 281 advantage in ports and related industries. In order to maintain 282 that advantage, the office shall: 283 a. Allocate at least 60 percent of the capital to direct 284 port activities as described in s. 402.021(9). 285 b. Allocate at least 20 percent of the capital to port 286 related activities as specified in s. 403.021(9). 287 c. Allocate at least 20 percent of the capital to education 288 related to ports and port-related studies under the New Florida 289 Initiative developed by the Florida Board of Governors of the 290 State University System. 291 2. The capital raised under this section shall be allocated 292 by July 1, 2012. 293 3. An individual port project may not consume more than 15 294 percent of the total revenues of the corporation’s intake. 295 (b) All capital not invested in qualified port businesses: 296 1. Must be held in a financial institution as defined by s. 297 655.005(1)(h) or held by a broker-dealer registered under s. 298 517.12. 299 2. Must be invested only in: 300 a. United States Treasury obligations; 301 b. Certificates of deposit or other obligations, maturing 302 within 3 years after acquisition of such certificates or 303 obligations, issued by any financial institution or trust 304 company incorporated under the laws of the United States; 305 c. Marketable obligations, maturing within 5 years or less 306 after the acquisition of such obligations, which are rated “A” 307 or better by any nationally recognized credit rating agency; 308 d. Mortgage-backed securities, with an average life of 5 309 years or less, after the acquisition of such securities, which 310 are rated “A” or better by any nationally recognized credit 311 rating agency; 312 e. Collateralized mortgage obligations and real estate 313 mortgage investment conduits that are direct obligations of an 314 agency of the Federal Government; are not private-label issues; 315 are in book-entry form; and do not include the classes of 316 interest only, principal only, residual, or zero; or 317 f. Interests in money market funds, the portfolio of which 318 is limited to cash and obligations described in sub 319 subparagraphs a.-d. 320 (c) The aggregate amount of all investments in qualified 321 port businesses made by the certified capital company from the 322 date of its certification shall be considered in the calculation 323 of the percentage requirements under paragraph (a). 324 (d) When an investment in a qualified port business is 325 ready, the port must petition the office to receive funding and 326 certify that the investment is of a beneficial nature to the 327 port, is ready to proceed within 60 days for design, 328 construction, and permitting, and will create a lasting economic 329 impact as defined by the office. Applications for funding must 330 be made to the office under rules adopted by the office. 331 (6) PREMIUM TAX CREDIT; AMOUNT; LIMITATIONS.— 332 (a) Any certified investor who makes an investment of 333 certified capital shall earn a vested credit against premium tax 334 liability equal to 100 percent of the certified capital invested 335 by the certified investor. Certified investors shall be entitled 336 to use no more than 10 percentage points of the vested premium 337 tax credit, including any carryforward credits under this 338 section, per year beginning with premium tax filings for 339 calendar year 2012. Any premium tax credits not used by 340 certified investors in any single year may be carried forward 341 and applied against the premium tax liabilities of such 342 investors for subsequent calendar years. The carryforward credit 343 may be applied against subsequent premium tax filings through 344 calendar year 2029. 345 (b) The credit to be applied against premium tax liability 346 in any single year may not exceed the premium tax liability of 347 the certified investor for that taxable year. 348 (c) A certified investor claiming a credit against premium 349 tax liability earned through an investment in a certified 350 capital company shall not be required to pay any additional 351 retaliatory tax levied pursuant to s. 624.5091 as a result of 352 claiming such credit. Because credits under this section are 353 available to a certified investor, s. 624.5091 does not limit 354 such credit in any manner. 355 (d) The amount of tax credits vested under this section 356 shall not be considered in ratemaking proceedings involving a 357 certified investor. 358 (7) ANNUAL TAX CREDIT; MAXIMUM AMOUNT; ALLOCATION PROCESS.— 359 (a) The total amount of tax credits which may be allocated 360 by the office shall not exceed $500 million. The total amount of 361 tax credits which may be used by certified investors under this 362 section shall not exceed $25 million annually. 363 (b) The office shall be responsible for allocating premium 364 tax credits as provided for in this section to certified capital 365 companies. 366 (c) Each certified capital company must apply to the office 367 for an allocation of premium tax credits for potential certified 368 investors by March 15, 2011, on a form developed by the office 369 with the cooperation of the Department of Revenue. The form 370 shall be accompanied by an affidavit from each potential 371 certified investor confirming that the potential certified 372 investor has agreed to make an investment of certified capital 373 in a certified capital company up to a specified amount, subject 374 only to the receipt of a premium tax credit allocation pursuant 375 to this subsection. No allocation shall be made to the potential 376 investors of a certified capital company unless such certified 377 capital company has filed premium tax allocation claims that 378 would result in an allocation to the potential investors in such 379 certified capital company of not less than $15 million in the 380 aggregate. 381 (d) On or before April 1, 2011, the office shall inform 382 each certified capital company of its share of total premium tax 383 credits available for allocation to each of its potential 384 investors. 385 (e) If a certified capital company does not receive 386 certified capital equaling the amount of premium tax credits 387 allocated to a potential certified investor for which the 388 investor filed a premium tax allocation claim within 10 business 389 days after the investor received a notice of allocation, the 390 certified capital company shall notify the office by overnight 391 common carrier delivery service of the company’s failure to 392 receive the capital. That portion of the premium tax credits 393 allocated to the certified capital company shall be forfeited. 394 If the office must make a pro rata allocation under paragraph 395 (f), it shall reallocate such available credits among the other 396 certified capital companies on the same pro rata basis as the 397 initial allocation. 398 (f) If the total amount of capital committed by all 399 certified investors to certified capital companies in premium 400 tax allocation claims exceeds the aggregate cap on the amount of 401 credits that may be awarded, the premium tax credits that may be 402 allowed to any one certified investor shall be allocated using 403 the following ratio: 404 405 A/B = X/>$500,000,000 406 407 Where the letter “A” represents the total amount of certified 408 capital that certified investors have agreed to invest in any 409 one certified capital company, the letter “B” represents the 410 aggregate amount of certified capital that all certified 411 investors have agreed to invest in all certified capital 412 companies, the letter “X” is the numerator and represents the 413 total amount of premium tax credits and certified capital that 414 may be allocated to a certified capital company in calendar year 415 2011, and $500 million is the denominator and represents the 416 total amount of premium tax credits and certified capital that 417 may be allocated to all certified investors in calendar year 418 2011. Any such premium tax credits are not first available for 419 utilization until annual filings are made in 2012 for calendar 420 year 2011, and the tax credits may be used at a rate not to 421 exceed 10 percent annually. 422 (g) The maximum amount of certified capital for which 423 premium tax allocation claims may be filed on behalf of any 424 certified investor and its affiliates by one or more certified 425 capital companies may not exceed $25 million. 426 (h) To the extent that less than $500 million in certified 427 capital is raised in connection with the procedure set forth in 428 paragraphs (c)-(g), the department may adopt rules to allow a 429 subsequent allocation of the remaining premium tax credits 430 authorized under this section. 431 (8) ANNUAL TAX CREDIT; CLAIM PROCESS.— 432 (a) On an annual basis, on or before December 31, each 433 certified capital company shall file with the department and the 434 office, in consultation with the department, on a form 435 prescribed by the office, for each calendar year: 436 1. The total dollar amount the certified capital company 437 received from certified investors, the identity of the certified 438 investors, and the amount received from each certified investor 439 during the immediately preceding calendar year. 440 2. The total dollar amount the certified capital company 441 invested and the amount invested in qualified port businesses, 442 together with the identity and location of those businesses and 443 the amount invested in each qualified port business during the 444 immediately preceding calendar year. 445 3. For informational purposes only, the total number of 446 permanent, full-time jobs created or retained by the qualified 447 port business during the immediately preceding calendar year, 448 the average wage of the jobs created or retained, the industry 449 sectors in which the qualified port businesses operate, and any 450 additional capital invested in qualified port businesses from 451 sources other than certified capital companies. 452 (b) The form shall be verified by one or more principals of 453 the certified capital company submitting the form. Verification 454 shall be accomplished as provided in s. 92.525(1)(b) and subject 455 to the provisions of s. 92.525(3). 456 (c) The office shall review the form, and any supplemental 457 documentation, submitted by each certified capital company for 458 the purpose of verifying: 459 1. That the businesses in which certified capital has been 460 invested by the certified capital company are in fact qualified 461 port businesses and that the amount of certified capital 462 invested by the certified capital company is as represented in 463 the form. 464 2. The amount of certified capital invested in the 465 certified capital company by the certified investors. 466 3. The amount of premium tax credit available to certified 467 investors. 468 (d) The Department of Revenue may audit and examine the 469 accounts, books, or records of certified capital companies and 470 certified investors to ascertain the correctness of any report 471 and financial return that has been filed and to ascertain a 472 certified capital company’s compliance with the tax-related 473 provisions of this section. 474 (e) This subsection shall take effect January 1, 2011. 475 (9) REQUIREMENT FOR FULL INVESTMENT; STATE PARTICIPATION.— 476 (a) A certified capital company may make qualified 477 distributions at any time. In order to make a distribution to 478 its equity holders, other than a qualified distribution, a 479 certified capital company must have invested an amount 480 cumulatively equal to 100 percent of its certified capital in 481 investments in qualified port businesses. Payments to debt 482 holders of a certified capital company, however, may be made 483 without restriction with respect to repayments of principal and 484 interest on indebtedness owed to them by a certified capital 485 company, including indebtedness of the certified capital company 486 on which certified investors earned premium tax credits. A debt 487 holder that is also a certified investor or equity holder of a 488 certified capital company may receive payments with respect to 489 such debt without restrictions. 490 (b) Cumulative distributions from a certified capital 491 company to its certified investors and equity holders, other 492 than qualified distributions, in excess of the certified capital 493 company’s original certified capital and any additional capital 494 contributions to the certified capital company may be audited by 495 a nationally recognized certified public accounting firm 496 acceptable to the office, at the expense of the certified 497 capital company, if the department directs such an audit to be 498 conducted. The audit shall determine whether aggregate 499 cumulative distributions from the certified capital company to 500 all certified investors and equity holders, other than qualified 501 distributions, have equaled the sum of the certified capital 502 company’s original certified capital and any additional capital 503 contributions to the certified capital company. If at the time 504 of any such distribution made by the certified capital company, 505 such distribution taken together with all other such 506 distributions made by the certified capital company, other than 507 qualified distributions, exceeds in the aggregate the sum of the 508 certified capital company’s original certified capital and any 509 additional capital contributions to the certified capital 510 company, as determined by the audit, the certified capital 511 company shall pay to the Department of Revenue 10 percent of the 512 portion of such distribution in excess of such amount. Payments 513 to the Department of Revenue by a certified capital company 514 pursuant to this paragraph may not exceed the aggregate amount 515 of tax credits used by all certified investors in such certified 516 capital company. 517 (10) DECERTIFICATION.— 518 (a) The department shall conduct an annual review of each 519 certified capital company to determine if the certified capital 520 company is abiding by the requirements of certification, to 521 advise the certified capital company as to the eligibility 522 status of its investments in qualified port businesses, and to 523 ensure that no investment has been made in violation of this 524 section. The cost of the annual review shall be paid by each 525 certified capital company. 526 (b) This subsection does not limit the Chief Financial 527 Officer’s authority to conduct audits of certified capital 528 companies as deemed appropriate and necessary. 529 (c) Any material violation of this section, or a finding 530 that the certified capital company or any principal or director 531 thereof has committed any act specified in paragraph (4)(d), 532 constitutes grounds for decertification of the certified capital 533 company. If the department determines that a certified capital 534 company is no longer in compliance with the certification 535 requirements of this section, the department shall, by written 536 notice, inform the officers of such company that the company may 537 be subject to decertification 90 days after the date of mailing 538 of the notice, unless the deficiencies are corrected and the 539 company is again found to be in compliance with all 540 certification requirements. 541 (d) At the end of the 90-day grace period, if the certified 542 capital company is still not in compliance with the 543 certification requirements, the department may issue a notice to 544 revoke or suspend the certification or to impose an 545 administrative fine. The department shall advise each respondent 546 of the right to an administrative hearing under chapter 120 547 prior to final action by the department. 548 (e) If the department revokes a certification, such 549 revocation shall also deny, suspend, or revoke the 550 certifications of all affiliates of the certified capital 551 company. 552 (f) Decertification of a certified capital company for 553 failure to meet all requirements for continued certification 554 under paragraph (5)(a) may cause the recapture of premium tax 555 credits previously claimed by such company and the forfeiture of 556 future premium tax credits to be claimed by certified investors 557 with respect to such certified capital company, as follows: 558 1. Decertification of a certified capital company within 3 559 years after its certification date shall cause the recapture of 560 all premium tax credits previously claimed by such company and 561 the forfeiture of all future premium tax credits to be claimed 562 by certified investors with respect to such company. 563 2. When a certified capital company meets all requirements 564 for continued certification under subparagraph (5)(a)1. and 565 subsequently fails to meet the requirements for continued 566 certification under subparagraph (5)(a)2., the premium tax 567 credits that have been or will be taken by certified investors 568 within 3 years after the certification date of the certified 569 capital company are not subject to recapture or forfeiture; 570 however, all premium tax credits that have been or will be taken 571 by certified investors after the third anniversary of the 572 certification date of the certified capital company are subject 573 to recapture or forfeiture. 574 3. When a certified capital company meets all requirements 575 for continued certification under subparagraphs (5)(a)1. and 2. 576 and subsequently fails to meet the requirements for continued 577 certification under subparagraph (5)(a)3., the premium tax 578 credits that have been or will be taken by certified investors 579 within 4 years after the certification date of the certified 580 capital company are not subject to recapture or forfeiture; 581 however, all premium tax credits that have been or will be taken 582 by certified investors after the fourth anniversary of the 583 certification date of the certified capital company are subject 584 to recapture and forfeiture. 585 4. If a certified capital company has met all requirements 586 for continued certification under paragraph (5)(a), but the 587 company is subsequently decertified, the premium tax credits 588 that have been or will be taken by certified investors within 5 589 years after the certification date of the company are not 590 subject to recapture or forfeiture. Premium tax credits to be 591 taken after the 5th year of certification are subject to 592 forfeiture only if the certified capital company is decertified 593 within 5 years after its certification date. 594 5. If a certified capital company has invested an amount 595 cumulatively equal to 100 percent of its certified capital in 596 investments in qualified port businesses, all premium tax 597 credits claimed or to be claimed by its certified investors are 598 not subject to recapture or forfeiture. 599 (g) Decertification of a certified capital company pursuant 600 to subsection (4) or this subsection does not affect the ability 601 of certified investors in such certified capital company to 602 continue to claim future premium tax credits earned as an 603 investment in the certified capital company during the period in 604 which it was duly certified. 605 (h) The office shall send written notice to the address of 606 each certified investor whose premium tax credit has been 607 subject to recapture or forfeiture, using the address last shown 608 on the last premium tax filing. 609 (i) The certified investor is responsible for returning to 610 the Department of Revenue any forfeited insurance premium tax 611 credits, and such funds shall be paid into the General Revenue 612 Fund. 613 (j) The certified investor shall file with the Department 614 of Revenue an amended return or such other report as the 615 department may prescribe by rule and pay any required tax, not 616 later than 60 days after the decertification has been agreed to 617 or finally determined, whichever shall first occur. 618 (k) A notice of deficiency may be issued: 619 1. At any time within 5 years after the date such 620 notification is given; or 621 2. At any time if a certified investor fails to notify the 622 Department of Revenue. 623 624 In either case, the amount of any proposed assessment set forth 625 in such notice shall be limited to the amount of any deficiency 626 resulting under this section from the recomputation of the 627 certified investor’s insurance premium tax and, if applicable, 628 its retaliatory tax for the taxable year giving effect only to 629 the item or items reflected in the decertification adjustment. 630 (l) Any certified investor who fails to report and timely 631 pay any tax due as a result of the forfeiture of its insurance 632 premium tax credit is in violation of this subsection and is 633 subject to a penalty of 10 percent of any underpayment or 634 delinquent taxes due and payable. 635 (m) When any taxpayer fails to pay any amount due as a 636 result of the forfeiture of its insurance premium tax credit as 637 provided for in this subsection, on or before the due date as 638 specified in this subsection, interest shall be due on any 639 insurance premium or retaliatory tax deficiency resulting from 640 such forfeiture, at the rate of 12 percent per year from the due 641 date of such amended return until paid. 642 (11) TRANSFERABILITY.—The claim of a transferee of a 643 certified investor’s unused premium tax credit shall be 644 permitted in the same manner and subject to the same provisions 645 and limitations of this section as the original certified 646 investor. The term “transferee” means any person who: 647 (a) Through the voluntary sale, assignment, or other 648 transfer of the business or control of the business of the 649 certified investor, including the sale or other transfer of 650 stocks or assets by merger, consolidation, or dissolution, 651 succeeds to all or substantially all of the business and 652 property of the certified investor; 653 (b) Becomes by operation of law or otherwise the parent 654 company of the certified investor; 655 (c) Directly or indirectly owns, whether through rights, 656 options, convertible interests, or otherwise, controls, or holds 657 power to vote 10 percent or more of the outstanding voting 658 securities or other ownership interest of the certified 659 investor; 660 (d) Is a subsidiary of the certified investor or has 10 661 percent or more of its outstanding voting securities or other 662 ownership interests directly or indirectly owned, whether 663 through rights, options, convertible interests, or otherwise, by 664 the certified investor; or 665 (e) Directly or indirectly controls, is controlled by, or 666 is under common control with the certified investor. 667 (12) REPORTING REQUIREMENTS.—The office shall report on an 668 annual basis to the Governor, the President of the Senate, and 669 the Speaker of the House of Representatives on or before April 670 1: 671 (a) The total dollar amount each certified capital company 672 received from all certified investors and any other investor, 673 the identity of the certified investors, and the total amount of 674 premium tax credit used by each certified investor for the 675 previous calendar year. 676 (b) The total dollar amount invested by each certified 677 capital company and that portion invested in qualified port 678 businesses, the identity and location of those businesses, the 679 amount invested in each qualified port business, and the total 680 number of permanent, full-time jobs created or retained by each 681 qualified port business. 682 (c) The return for the state as a result of the certified 683 capital company investments in qualified port businesses, 684 including the extent to which: 685 1. Certified capital company investments have contributed 686 to employment growth. 687 2. The wage level of businesses in which certified capital 688 companies have invested exceeds the average wage for the county 689 in which the jobs are located. 690 3. The investments of the certified capital companies in 691 qualified port businesses have contributed to expanding or 692 diversifying the economic base of the state. 693 (13) FEES.—All fees and charges of any nature collected by 694 the department under this section shall be paid into the State 695 Treasury and credited to the General Revenue Fund. 696 (14) RULEMAKING AUTHORITY.— 697 (a) The Department of Revenue may by rule prescribe forms 698 and procedures for the tax credit filings, audits, and 699 forfeiture of premium tax credits described in this section, and 700 for certified capital company payments under paragraph (9)(b). 701 (b) The office may adopt any rules necessary to carry out 702 its respective duties, obligations, and powers related to the 703 administration, review, and reporting provisions of this section 704 and may perform any other acts necessary for the proper 705 administration and enforcement of such duties, obligations, and 706 powers. 707 Section 2. This act shall take effect July 1, 2010.