Oklahoma § 68-2357.8 - Qualified venture capital company - Annual report Written statement to investors - Violations and penalties Registration system

§ 68-2357.8. Qualified venture capital company - Annual report Written statement to investors - Violations and penalties Registration system

A. Each qualified venture capital company, as defined in

Section 2357.7 of this title, shall file an annual report within one

hundred twenty (120) days after each successive calendar year end

with the Oklahoma Tax Commission which lists all funds invested in

such company which may qualify for the tax credit allowed by Section

2357.7 of this title. Said report shall state the amount of funds

invested in such company during the taxable year by persons or

corporations, the Social Security number of such person or the

federal identification number of such corporation making such

investments, and shall include a schedule listing the type and

amount of investments made by said venture capital company together

with such other information as the Tax Commission may prescribe.

B. Each qualified venture capital company shall furnish to each

person or corporation who made an investment in such company during

the preceding year a written statement showing the name of the

venture capital company, the name of the investor, the total amount

of investments in the company made by such person or corporation and

such other information as the Tax Commission may require. Said

statement shall be attached to the income tax return of such person

or corporation in order to qualify for said tax credit.

C. Any qualified venture capital company who refuses or fails

to comply with the provisions of this section or is hereafter found

guilty in a court of competent jurisdiction of any violation of any

Oklahoma income tax law shall not be eligible to be a qualified

venture capital company for purposes of Section 2357.7 of this

title. For investments in a venture capital company made prior to

the effective date of this act, if a venture capital company does

not invest its funds in a business that meets the definition of an

“Oklahoma business venture” or the Oklahoma business venture fails

to expend the proceeds of the investment, as provided for in Section

2357.7 of this title, the venture capital company shall pay to the

Tax Commission a penalty equal to the aggregate amount of tax credit

provided to investors in such venture capital company multiplied by

a fraction, the numerator of which is a percentage equal to the

Oklahoma Statutes - Title 68. Revenue and Taxation

difference between the percentage of capitalization required to be

invested in Oklahoma business ventures and the percentage of funds

invested in Oklahoma business ventures calculated in accordance with

subparagraph b of paragraph 1 of subsection B of Section 2357.7 of

this title and the denominator of which is the percentage of

capitalization required to be invested in Oklahoma business

ventures. Provided, to the extent that the penalty cannot be

collected from the venture capital company, the penalty shall be

collected from the taxpayers to whom the tax credits have been

granted or transferred. Tax credits granted for investments in

venture capital companies made on or after the effective date of

this act shall be subject to the provisions of Section 5 of this

act.

D. Any taxpayer who refuses or fails to comply with the

provisions of this section or is hereafter found guilty in a court

of competent jurisdiction of any violation of any Oklahoma income

tax law shall not be eligible for the tax credit granted in Section

2357.7 of this title.

E. The Tax Commission is directed to immediately develop a

system for registration of any income tax credits issued pursuant to

Section 2357.7 et seq. of this title and a system which permits

verification that any tax credit claimed upon an income tax return

is validly issued and properly taken in the year of claim and

ensures that any transfers of the income tax credit are not unduly

restricted or hindered.

Added by Laws 1986, c. 265, § 2, eff. Jan. 1, 1987. Amended by Laws

1987, c. 222, § 111, operative July 1, 1987; Laws 1988, 3rd

Ex.Sess., c. 2, § 3, emerg. eff. Sept. 9, 1988; Laws 1998, c. 226, §

2, eff. Jan. 1, 1999; Laws 2006, c. 281, § 4, emerg. eff. June 7,

2006.

§68-2357.8A. Qualified venture capital company investment credit Recaptured credit amount - Tax increase.

A. The provisions of this section shall only be applicable to

investments in qualified venture capital companies made on or after

June 7, 2006, pursuant to Section 2357.7 of this title. As used in

this section, “recapture event” means that with respect to an

investment in an Oklahoma business venture by a qualified venture

capital company:

1. The Oklahoma business venture fails to expend at least fifty

percent (50%) of the proceeds of qualified investments for

acquisition of tangible or intangible assets to be used in the

active conduct of the trade or business of the Oklahoma business

venture or for working capital for the active conduct of such trade

or business within eighteen (18) months after the investment is made

or within an extension of such period as provided in Section 2357.7

Oklahoma Statutes - Title 68. Revenue and Taxation

of this title. For purposes of this paragraph, “working capital”

shall not include consulting, brokerage or transaction fees;

2. The investment in the Oklahoma business venture is

transferred, withdrawn or otherwise returned within five (5) years;

provided, a “recapture event” shall not include the transfer,

withdrawal or return of an investment as a result of a “market-based

liquidity event”. As used in Section 2351 et seq. of this title, a

“market-based liquidity event” means that an Oklahoma business

venture:

a.

sells all or substantially all of its assets to, or is

acquired by share acquisition, share exchange, merger,

consolidation or other similar transaction by another

person or entity other than a person or entity

controlled by a person that made an investment in the

qualified venture capital company that provided funds

for use by the Oklahoma business venture,

b.

conducts an initial public offering of a class of its

equity securities pursuant to the requirements of the

United States Securities Act of 1933 or other

applicable federal law governing the sale of

securities in interstate commerce,

c.

makes an amortization payment under the terms of a

debt instrument, or

d.

repays indebtedness from net income as determined in

accordance with generally accepted accounting

principles or proceeds of the sale of assets in the

ordinary course of business; or

3. The Oklahoma Tax Commission finds that the investment does

not meet the requirements of Section 2357.7 of this title.

B. If a recapture event occurs with respect to an investment

for which a credit authorized by Section 2357.7 of this title was

claimed, the tax imposed pursuant to the applicable provisions of

Title 36 of the Oklahoma Statutes or this title shall be increased

to the extent of the recaptured credit amount.

C. For purposes of this section, the recapture amount shall be

equal to the sum of:

1. The aggregate decrease in the credits previously allowed to

the taxpayer pursuant to Section 2357.7 of this title for all prior

taxable periods which would have resulted if no credit had been

authorized with respect to the qualified investment; plus

2. Interest at the rate prescribed by Section 217 of this title

on the amount determined pursuant to paragraph 1 of this subsection

for each prior taxable period for the period beginning on the due

date for filing the applicable report or return for the prior

taxable period.

D. The tax for the taxable period shall be increased pursuant

to this section only with respect to credits which were used to

Oklahoma Statutes - Title 68. Revenue and Taxation

reduce tax liability. In the case of credits not used to reduce tax

liability, the carryforwards allowed shall be adjusted accordingly.

E. For any transaction that is audited by the Tax Commission

after such credits have been allowed, but which is subsequently

determined to constitute a recapture event, the Tax Commission shall

be required to disallow any and all credits claimed in violation of

the requirements of this section or any other provision of Section

2357.7 or 2357.8 of this title for a period of ten (10) years after

the date as of which any applicable tax report or return utilizing

such credits is filed.

F. The provisions of subsection E of this section shall

supersede any other provision of the Uniform Tax Procedure Code or

any other state tax law that would prohibit the disallowance of such

credits based upon an otherwise applicable statute of limitations.

Added by Laws 2006, c. 281, § 5, emerg. eff. June 7, 2006. Amended

by Laws 2008, c. 440, § 2.