The submittal of the Project Description is the critical first step to access HPIP benefits. It provides proof of foreknowledge of the program’s benefits, which is necessary if the program is to function as an incentive regarding decisions for capital investment. Current regulations and statutory amendments require a business to provide Commerce with the completed Project Description before the company formally commits to any capital investment on which it expects to earn an HPIP investment tax credit. A formal commitment is any agreement which gives the other party legally enforceable monetary or other remedies should the company back out of the agreement, i.e. when a purchase or lease agreement is executed or when a deposit would be forfeited on machinery that had been ordered. A formal commitment also includes moving machinery or equipment into Kansas from out of state.
Complete the Project Description form using your best estimates of future spending. Do not include any assets for which a formal commitment has already been made on this form. All asset purchases and operating leases (which earn HPIP investment tax credits based on eight times annual lease payment) are considered pre-identified and therefore may be eligible to receive tax credits, from the date Commerce receives the form via fax or e-mail or the postmark if mailed. If sent by fax or e-mail, you must follow up by sending the original notarized form.
As soon as your company anticipates capital investment in excess of $50,000 or $1,000,000 in the following metro counties; Douglas, Johnson, Shawnee, Sedgwick, and Wyandotte. Keep in mind that these are estimates and can be revised as the project progresses.
To satisfy required foreknowledge of the program, submit a Project Description pre-identifying the project’s estimated capital investment and indicate the location as “yet to be determined.” As soon as the location can be disclosed, please file a revised Project Description providing the location address.
Eligible capital investment may include the value of real and tangible personal property (land and assets) that are depreciable or amortizable and used by the taxpayer in the operation of the worksite facility. The statutes do not allow inventory or property sold to customers or “rolling stock” unless it is used exclusively at the worksite.
The value is its original cost if owned by the taxpayer or eight times the net annual rental rate if leased.
If you become aware of material changes in the amounts of investment spending, types of investment spending, timing of investment spending or other significant changes, you should submit a revised Project Description to Commerce before the company has committed to any additional new spending that was not originally pre-identified. Use the same Project Description number assigned to the original and note it as a revision. Commerce currently defines a material change as a $500,000 or more increase in the original capital investment estimate. A “time frame” change necessitating a revised Project Description would be a change in the taxable year in which the investment is anticipated to be made. Do not send revised Project Descriptions for material changes that are lower than initial estimates.
HPIP Program Manager, Kansas Department of Commerce, 1000 S.W. Jackson - Suite 100, Topeka, KS 66612-1354
Office: (785) 296-7174
A Project Description revision will be required if capital investment increases $500,000 or more or if the time frame changes.
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