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DEPARTMENT OF ENVIRONMENTAL QUALITY

 

DIVISION 17

PLASTICS RECYCLING TAX CREDITS

 

340-017-0010

Purpose

The purpose of these rules is to prescribe procedures and criteria to be used by the Department and Commission for issuance of tax credits to Oregon businesses that make investments in order to collect, transport, or process reclaimed plastic or to manufacture a reclaimed plastic product. These rules are to be used in connection with ORS 468.451 to 468.491 and apply only to investments made on or after January 1, 1986 and before December 31, 2001, except where otherwise noted herein.

Stat. Auth.: ORS 468.0150 
Stats. Implemented: ORS 468.150 - ORS 468.190 
Hist.: DEQ 4-1986, f. & ef. 2-12-86; DEQ 29-1989(Temp), f. & cert. ef. 12-14-89; DEQ 7-1990, f. & cert. ef. 3-13-90; DEQ 6-1998, f. 4-24-98, cert. ef. 5-1-98

340-017-0015

Definitions

(1) "Investment" means the amount of money a person invests to acquire or construct equipment, personal property or machinery necessary to collect, transport, or process reclaimed plastic or to manufacture a reclaimed plastic product. An investment shall be determined to have been made on the date a sales contract is agreed to by the buyer or the date of issuance of a purchase order.

(2) "Circumstances Beyond the Control of the Applicant" means facts, conditions and circumstances which applicant's due care and diligence would not have avoided.

(3) "Commission" means Environmental Quality Commission or the Commission's sub-delegate.

(4) "Department" means Department of Environmental Quality.

(5) "Personal Property' means any investment in property directly related to the operation of the industry or enterprise seeking the tax credit, which make a significant contribution to the collection, transportation or processing of reclaimed plastic or the manufacture of a reclaimed plastic product, excluding land and buildings.

(6) "Qualifying Business" means a business in Oregon that collects, transports, or processes reclaimed plastic or manufactures a reclaimed plastic product.

(7) "Reclaimed Plastic" means plastic from industrial consumers, commercial users or post-consumer waste. "Reclaimed Plastic" includes shredded plastics, regrind, pellets or any other similar products manufactured from Oregon industrial consumers, commercial users, or post consumer waste that is sold for the purpose of making an end product out of reclaimed plastic and is intended to be used to manufacture a non-medical or non-food plastic product.

(8) "Reclaimed Plastic Product" means a plastic product of real economic value for which more than 50 percent of the plastic used in the product is reclaimed plastic.

(9) "Special Circumstances" means emergencies which call for immediate erection, construction or installation of a facility, cases where applicant has relied on incorrect information provided by Department personnel as demonstrated by letters, records of conversations or other written evidence, or similar adequately documented circumstances which directly resulted in applicant's failure to file a timely application for preliminary certification.

Stat. Auth.: ORS 468.150 
Stats. Implemented: ORS 468.150 - ORS 468.190 
Hist.: DEQ 4-1986, f. & ef. 2-12-86; DEQ 29-1989(Temp), f. & cert. ef. 12-14-89; DEQ 7-1990, f. & cert. ef. 3-13-90; DEQ 6-1998, f. 4-24-98, cert. ef. 5-1-98

340-017-0020

Procedures For Receiving Preliminary Tax Credit Certification

(1) Filing of Application:

(a) Any person proposing to apply for final certification of an investment made in Oregon to collect, transport or process reclaimed plastic or to manufacture a reclaimed plastic product pursuant to ORS 468.461 shall file an application for preliminary certification with the Department of Environmental Quality. The application shall be made on a form provided by the Department. The preliminary certificate need not be issued prior to construction for compliance with this requirement;

(b) The investment must not be made until 30 days after an application is received by the Department unless the Department reviews the application and notifies the applicant that the application is complete. If the investment is made within 30 days after submitting the application and the Department has not notified the applicant that the application is complete, the application will be rejected by the Department;

(c) The Commission may waive the filing of the preliminary application if it finds the filing inappropriate because special circumstances render the filing unreasonable and if it finds such investment would otherwise qualify for tax credit certification pursuant to ORS 468.451 to 468.491;

(d) Within 30 days of the receipt of an application for preliminary certification, the Department shall request any additional information that applicant needs to submit in order for the application to be considered complete. The Department may require any other information necessary to determine whether the proposed investment is in accordance with Department statutes, rules and standards;

(e) The application shall not be considered complete until the Department receives the information requested and notifies the applicant in writing that the application is complete and ready for processing. However, if the Department does not make a timely request pursuant to subsection (1)(d) of this rule, the application shall be deemed complete 30 days after receipt of the application.

(2) Approval of Preliminary Certification:

(a) If the Department determines that the proposed investment is eligible, it shall within 60 days of receipt of a completed application issue a preliminary certificate approving the investment. The preliminary certificate does not include a determination of the full extent to which a facility is eligible for tax credit;

(b) If within 60 days of the receipt of a completed application, the Department fails to issue a preliminary certificate of approval and the Commission fails to issue an order denying certification, the preliminary certificate shall be considered to have been issued;

(c) Issuance of a preliminary tax credit certification does not guarantee final tax credit certification.

(3) Denial of Preliminary Certification:

(a) If the Department determines that the investment does not comply with the Department statutes, rules and standards, the Commission shall issue an order denying certification within 60 days of receipt of a completed application;

(b) Notice of the Department's recommended action to deny an application shall be mailed to the applicant at least seven calendar days before the Commission meeting where the application will be considered unless the applicant waives the notice requirement in writing.

(4) Appeal: Within 20 days from the date of mailing of the order, the applicant may demand a hearing. The demand shall be in writing, shall state the grounds for hearing and shall be mailed to the Director of the Department. The hearing shall be conducted in accordance with the applicable provisions of ORS 183.310 to 183.550.

Stat. Auth.: ORS 468.150 
Stats. Implemented: ORS 468.150 - ORS 468.190 
Hist.: DEQ 4-1986, f. & ef. 2-12-86; DEQ 29-1989(Temp), f. & cert. ef. 12-14-89; DEQ 7-1990, f. & cert. ef. 3-13-90; DEQ 6-1998, f. 4-24-98, cert. ef. 5-1-98

340-017-0025

Procedures For Final Tax Credit Certification

(1) Filing of Application:

(a) A written application for final tax credit certification shall be submitted to the Department on a form provided by the Department;

(b) Within 30 days of receipt of an application, the Department shall request any additional information that applicant needs to submit in order for the application to be considered complete. The Department may also require any other information necessary to determine whether the investment is in accordance with Department statutes, rules and standards;

(c) An application shall not be considered filed until all requested information is submitted by the applicant, and the Department notifies the applicant in writing that the application is complete and ready for processing;

(d) The application must be submitted between January 1, 1986 and December 31, 2001. Failure to file a timely application shall make the investment ineligible for tax credit certification;

(e) The application must be filed complete prior to December 31, 2001;

(f) An application may be withdrawn and resubmitted by applicant at any time between January 1, 1986 and December 31, 2001 without paying an additional processing fee, unless the amount of the investment has increased. An additional processing fee shall be calculated by subtracting the cost of the investment on the original application from the cost of the investment on the resubmitted application and multiplying the remainder by one percent;

(g) If the Department determines the application is incomplete for processing and applicant fails to submit requested information within 180 days of the date when the Department requested the information, the application will be rejected by the Department. If the applicant makes a written request for additional time to submit requested information, the Department may grant additional time so long as applicant is required to submit requested information by December 31, 2001.

(2) Commission Action:

(a) Notice of the Department's recommended action on the application shall be mailed to the applicant at least seven days before the Commission meeting where the application will be considered unless the applicant waives the notice requirement in writing;

(b) The Commission shall act on an application for certification before the 120th day after the filing of a complete application. Failure of the Commission to act constitutes approval of the application;

(c) The Commission may consider and act upon an application at any of its regular or special meetings. The matter shall be conducted as an informal public informational hearing, not a contested case hearing, unless ordered otherwise by the Commission.

(d) Certification:

(A) If the Commission determines that the investment is eligible, it shall certify the actual cost of the facility and the portion of the actual cost properly allocable to the investment made for the purpose of collecting, transporting or processing reclaimed plastic or manufacturing a reclaimed plastic product. Each certificate shall bear a separate serial number for each such facility;

(B) No determination of the proportion of the investment to be certified shall be made until receipt of the application;

(C) A certificate is effective for purposes of tax relief in accordance with ORS 315.324 if investment was made on or after January 1, 1986 and before December 31, 2001;

(D) Certification under to ORS 468.461 shall be granted for a period of five consecutive years. The five-year period shall begin with the tax year of the person in which the facility is certified under this section.

(e) Rejection: If the Commission rejects an application for certification, or certifies a lesser actual cost of the investment or a lesser portion of the actual cost properly allocable to the collection, transportation or processing of reclaimed plastic or to the manufacture of a reclaimed plastic product than was claimed in the application for certification, the Commission shall cause written notice of its action, and a concise statement of the findings and reasons therefore, to be sent by registered or certified mail to the applicant.

(3) Appeal: If the application is rejected for any reason, or if the applicant is dissatisfied with the certification of actual cost or portion of the actual cost allocated to the collection, transportation or processing of reclaimed plastic or to the manufacture of a reclaimed plastic product, the applicant may appeal as provided in ORS 468.110. The rejection of the certification is final and conclusive on all parties unless the applicant appeals as provided in ORS 468.110 before the 30th day after notice was mailed by the Commission.

Stat. Auth.: ORS 468.150 
Stats. Implemented: ORS 468.150 - ORS 468.190 
Hist.: DEQ 4-1986, f. & ef. 2-12-86; DEQ 29-1989(Temp), f. & cert. ef. 12-14-89; DEQ 7-1990, f. & cert. ef. 3-13-90; DEQ 6-1998, f. 4-24-98, cert. ef. 5-1-98

340-017-0030

Determination of Percentage of Certified Investment Costs Allocable to Collection, Transportation or Processing of Reclaimed Plastic or Manufacturing a Reclaimed Plastic Product

(1) Definitions:

(a) "Claimed Investment Costs" means the actual cost of the claimed equipment, machinery, or personal property. Certification of the actual cost of the claimed equipment, machinery, or personal property must be documented by a certified public accountant for claimed investment costs which are over $20,000;

(b) "Net Investment Cost" means the claimed investment costs minus the salvage value of any equipment, machinery or personal property removed from service;

(c) "Salvage Value" means the value of a piece of equipment, machinery or personal property at the end of its useful life minus what it costs to remove it from service. Salvage value can never be less than zero.

(2) In establishing the percent of costs properly allocable to the investment costs incurred to allow a person to collect, transport or process reclaimed plastic or to manufacture a reclaimed plastic product, the Commission shall consider the following factors and make appropriate findings regarding their applicability:

(a) The estimated percent of time the equipment, machinery or personal property is utilized to collect, transport or process reclaimed plastic or manufacture a reclaimed plastic product, based on projections for the first year of operation;

(b) The alternative methods, equipment and costs for achieving the same objective;

(c) Other factors which are relevant in establishing a portion of the actual cost of the investment properly allocable to the collection, transportation or processing of reclaimed plastic or to the manufacture of a reclaimed plastic product.

(3) The portion of actual costs properly allocable shall be from 0 to 100 percent in increments of one percent. If zero percent, the commission shall issue an order denying certification.

(4) The portion of actual costs properly allocable shall not include costs for:

(a) Air conditioners;

(b) Septic tanks or other facilities for human waste;

(c) Property installed, constructed or used for moving sewage to the collecting facilities of a public or quasi-public sewerage system;

(d) Equipment, personal property or machinery not directly related to the operation of the industry or enterprise seeking the tax credit; or

(e) Any distinct portion of the investment which makes an insignificant contribution to the collection, transportation or processing of reclaimed plastic or the manufacture of a reclaimed plastic product including the following specific items:

(A) Office furnishings;

(B) Parking lots and road improvements;

(C) Landscaping;

(D) External lighting;

(E) Company or related signs; and

(F) Automobiles.

Stat. Auth.: ORS 468.020 & ORS 468.456 
Stats. Implemented: ORS 468.486 
Hist.: DEQ 4-1986, f. & ef. 2-12-86; DEQ 29-1989(Temp), f. & cert. ef. 12-14-89; DEQ 7-1990, f. & cert. ef. 3-13-90; DEQ 6-1998, f. 4-24-98, cert. ef. 5-1-98

340-017-0035

Amount of Tax Credits Available

(1) For purposes of monitoring the Department's tax credit limit, the Department will consider the sum of the preliminary certifications issued in each calendar year. When preliminary certification is waived under OAR 340-001-0020, the year of final certification will be used:

(a) A preliminary certificate which is granted and then canceled within the same calendar year shall not be counted as part of the $1.5 million annual certification limit after it has been canceled;

(b) When a final certification is granted during the same year as a preliminary certification the lessor value of the two shall be used.

(2) Not more than $1.5 million in investment costs will be issued preliminary certification in any calendar year. In each calendar year, a minimum of $500,000 of the $1.5 million will be reserved for investments costing $100,000 or less.

(3) The maximum cost certified for each investment shall not exceed $500,000 except as permitted by section (5) of this rule.

(4) If the applications exceed the $1,500,000 limit, the Commission shall prioritize investments, based on the date of preliminary certification. Those applications received and determined by the Department to be complete first will receive first priority for certification. The total amount for which the investment is eligible shall be certified so long as there are adequate funds to do so.

(5) If the applications certified in any calendar year do not total $1,000,000, the Commission may increase the certified costs above the $500,000 maximum for previously certified investments. The increases shall be allocated based upon the method of prioritization used in section (4) of this rule. The increased allocation to previously certified investments under this section shall not include any of the $500,000 reserved under section (2) of this rule.

(6) When considering the percentage of costs properly allocable to the investment costs incurred to allow a person to collect, transport or process reclaimed plastic or to manufacture a reclaimed plastic product, the following steps will be used:

(a) Determine the claimed investment costs;

(b) Determine the salvage value, if any, of the equipment which is being taken out of service;

(c) Determine the net investment cost;

(d) Determine the estimated percentage of time the equipment, machinery, or personal property will be utilized to collect, transport or process reclaimed plastic or manufacture a reclaimed plastic product, based on projections for the first year of operation;

(e) Determine the total allocable cost multiplying the net investment cost by the percentage of time the equipment, machinery or personal property will be utilized to collect, transport or process reclaimed plastic or manufacture a reclaimed plastic product.

Stat. Auth.: ORS 468.150 
Stats. Implemented: ORS 468.150 - ORS 468.190 
Hist.: DEQ 4-1986, f. & ef. 2-12-86; DEQ 29-1989(Temp), f. & cert. ef. 12-14-89; DEQ 7-1990, f. & cert. ef. 3-13-90; DEQ 6-1998, f. 4-24-98, cert. ef. 5-1-98

340-017-0040

Procedure to Revoke Certification

(1) Pursuant to the procedures for a contested case under ORS 183.310 to 183.550, the Commission may order the revocation of the final tax credit certification issued under to ORS 468.466, if it finds that:

(a) The certification was obtained by fraud or misrepresentation; or

(b) The holder of the certificate has failed substantially to operate the qualifying business as specified in such certificate.

(2) As soon as the order of revocation under this rule has become final, the Commission shall notify the Oregon Department of Revenue.

(3) If the certification of an investment is ordered revoked pursuant to subsection (1)(a) of this rule, all prior tax relief provided to the holder of such certificate shall be forfeited and the Department of Revenue or the proper county officers shall proceed to collect those taxes not paid by the certificate holder as a result of the tax relief provided to the holder under any provision of ORS 315.324.

(4) If the certification of an investment is ordered revoked pursuant to subsection (1)(b) of this rule, the certificate holder shall be denied any further relief provided under 315.324 in connection with such facility from and after the date that the order of revocation becomes final.

(5) The Department may withhold revocation of a certificate when the investment ceases to be used for the collection, transportation or processing of reclaimed plastic or the manufacture of a recycled plastic product if the certificate holder indicates in writing that recycling activities specified in the certificate will commence again within five years time. The Department will provide the Department of Revenue with a copy of the certificate holder's written indication of intent to recommence recycling activities specified in the certificate. In the event that the facility is not returned to operation as indicated, the Department shall revoke the certificate.

Stat. Auth.: ORS 468.150 
Stats. Implemented: ORS 468.150 - ORS 468.190 
Hist.: DEQ 4-1986, f. & ef. 2-12-86; DEQ 29-1989(Temp), f. & cert. ef. 12-14-89; DEQ 7-1990, f. & cert. ef. 3-13-90; DEQ 6-1998, f. 4-24-98, cert. ef. 5-1-98

340-017-0045

Procedures For Transfer of a Tax Credit Certificate

To transfer a tax credit certificate from one holder to another, the Commission shall revoke the certificate and grant a new one to the new holder for the balance of the available tax credit following the procedure set forth in ORS 315.324.

Stat. Auth.: ORS 468.150 
Stats. Implemented: ORS 468.150 - ORS 468.190 
Hist.: DEQ 4-1986, f. & ef. 2-12-86; DEQ 6-1998, f. 4-24-98, cert. ef. 5-1-98

340-017-0050

Fees For Final Tax Credit Certification

(1) An application processing fee of one percent of the cost claimed in the application for final certification but no more than $5,000 shall be paid with each application for final certification. No final application is complete until the processing fee is submitted.

(2) One half of the processing fee paid as set forth in section (1) of this rule shall be refunded if the final application is rejected or withdrawn.

(3) The fees shall not be considered by the Environmental Quality Commission as part of the cost of the investment to be certified.

(4) All fees shall be made payable to the Department of Environmental Quality.

Stat. Auth.: ORS 468.150 
Stats. Implemented: ORS 468.150 - ORS 468.190 
Hist.: DEQ 4-1986, f. & ef. 2-12-86; DEQ 29-1989(Temp), f. & cert. ef. 12-14-89; DEQ 7-1990, f. & cert. ef. 3-13-90; DEQ 6-1998, f. 4-24-98, cert. ef. 5-1-98

340-017-0055

Taxpayers Receiving Tax Credit

(1) A person receiving a certificate under this Division may take tax relief only under ORS 315.324, depending upon the tax status of the person's trade or business.

(2) If the person receiving the certificate is an electing small business corporation as defined in section 1361 of the Federal Internal Revenue Code, each shareholder shall be entitled to take tax credit relief as provided in ORS 315.324, based on that shareholder's pro rata share of the certified cost of the investment.

(3) If the person receiving the certificate is a partnership, each partner shall be entitled to take tax credit relief as provided in ORS 315.324, based on that partner's pro rata share of the certified cost of the investment.

(4) Upon any sale, exchange or other disposition of equipment, personal property or machinery written notice must be provided to the Department of Environmental Quality by the company, corporation or individual for whom the tax credit certificate has been issued. Upon request, the taxpayer shall provide a copy of the contract or other evidence of disposition of the property to the Department of Environmental Quality.

(5) The company, corporation or individual claiming the tax credit for leased equipment, personal property, or machinery must provide a copy of a written agreement between the lessor and lessee designating the party to receive the tax credit and a copy of the complete and current lease agreement for the facility.

(6) The taxpayer claiming the tax credit for the equipment, personal property, or machinery with more than one owner shall provide a copy of a written agreement between the owners designating the party or parties to receive the tax credit certificate.

[NOTE: ORS 468.955(3) refers in error to ORS 316.097 and 317.116, which relate to Pollution Control Tax Credits, rather than Plastics Recycling Tax Credits. OAR 340-17-040(3) refers instead to claiming Plastics Recycling Tax Credit under ORS 316.103 and 317.106, consistent with legislative intent.]

[Publications: The publication(s) referred to or incorporated by reference in this rule are available from the agency.]

Stat. Auth.: ORS 468.150 
Stats. Implemented: ORS 468.150 - ORS 468.190 
Hist.: DEQ 4-1986, f. & ef. 2-12-86; DEQ 29-1989(Temp), f. & cert. ef. 12-14-89; DEQ 7-1990, f. & cert. ef. 3-13-90

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