Section 620.3520 - Tax credit earned, when - credit nonrefundable or sellable - recapture, when1. Upon making a capital investment in a rural fund, a rural investor shall have a vested right to earn a tax credit that will be issued by the department that may be used against such entity's state tax liability that may be utilized on each credit allowance date of such capital investment in an amount equal to the applicable percentage for such credit allowance date multiplied by the purchase price paid to the rural fund for the capital investment. The amount of the credit claimed by a rural investor shall not exceed the amount of such entity's state tax liability for the tax year for which the credit is claimed. Any amount of credit that a rural investor is prohibited from claiming in a taxable year as a result of this section may be carried forward for use in any of the five subsequent taxable years and shall not be carried back to prior taxable years. A rural investor claiming a credit under the provisions of sections 620.3500 to 620.3530 shall not incur any additional tax that may arise as a result of claiming such credit.2. No credit claimed under the provisions of sections 620.3500 to 620.3530 shall be refundable or sellable on the open market. Credits earned by or allocated to a partnership, limited liability company, or S-corporation may be allocated to the partners, members, or shareholders of such entity for their direct use in accordance with the provisions of any agreement among such partners, members, or shareholders, and a rural fund shall notify the department of the names of the entities that are eligible to utilize credits pursuant to an allocation of credits or a change in allocation of credits, or due to a transfer of a capital investment upon such allocation, change, or transfer. Such allocation shall not be considered a sale for the purposes of this section.3. The department may recapture credits from a taxpayer that claimed a credit authorized under this section if: (1) The rural fund does not invest sixty percent of its capital investment authority in qualified investments in this state within two years of the credit allowance date and one hundred percent of its capital investment authority in qualified investments in this state within three years of the credit allowance date, provided that at least seventy percent of such initial qualified investments shall be made in eligible businesses located in rural areas or eligible businesses that are also agribusinesses. In no event shall more than thirty percent of such initial qualified investments be made in eligible businesses located outside of a rural area;(2) The rural fund fails to maintain qualified investments equal to ninety percent of its capital investment authority from the third until the sixth credit allowance date, with seventy percent of such investments maintained in eligible businesses located in rural areas or eligible businesses that are also agribusinesses, provided that in no event shall more than thirty percent of such qualified investments be made in eligible businesses located outside of a rural area. For each year the rural fund fails to maintain such investments, the department may recapture an amount of such year's allowed credits equal to the percentage difference between ninety percent of a rural fund's capital investment authority and the actual amount of qualified investments maintained for such year. For the purposes of this subdivision, a qualified investment is considered maintained even if the qualified investment was sold or repaid so long as the rural fund reinvests an amount equal to the capital returned or recovered by the rural fund from the original investment, exclusive of any profits realized, in other qualified investments in this state within twelve months of the receipt of such capital. Amounts received periodically by a rural fund shall be treated as continually invested in qualified investments if the amounts are reinvested in one or more qualified investments by the end of the following calendar year. A rural fund shall not be required to reinvest capital returned from qualified investments after the fifth credit allowance date, and such qualified investments shall be considered held continuously by the rural fund through the sixth credit allowance date;(3) The rural fund, before exiting the program in accordance with sections 620.3500 to 620.3530 or prior to thirty days after the sixth credit allowance date, whichever is earlier, makes a distribution or payment that results in the rural fund having less than one hundred percent of its capital investment authority invested in qualified investments in this state or held in cash or other marketable securities, provided a rural fund shall be permitted to make distributions in amounts necessary for the principal and interest payments due to the leverage source; or(4) The rural fund violates the provisions of section 620.3525, in which case the department may recapture an amount equal to the amount of a rural fund's capital investment authority found to be in violation of such provisions. For the purposes of meeting and maintaining the objectives established for investment in subdivisions (1) and (2) of this subsection, a rural fund's qualified investments shall be multiplied by a factor of one and a quarter in counties with less than thirty thousand in population and more than thirteen thousand in population and shall be multiplied by a factor of one and a half in counties with a population of thirteen thousand or less according to the most recent decennial census.
4. No recapture shall occur until the rural fund has been given notice of noncompliance and afforded six months from the date of such notice to cure the noncompliance.Added by 2024 Mo. Laws, SB 802,s A, eff. 8/28/2024.