Governor Signs Bill Amending KOZ, KOEZ and KOIZ Act

On February 14, 2012, Governor Corbett signed Act No. 16 of 2012, which amends the Keystone Opportunity Zone, the Keystone Opportunity Expansion Zone and the Keystone Opportunity Improvement Zone Act.  This legislation authorizes the extension of tax exemptions, deductions, abatements and credits, allows for the creation of additional expansion zones and the expansion of existing zones for job creation.  An overview of the Act is set forth in the Fiscal Note to the Act.

Businesses that operate in Keystone Opportunity Zones (KOZs) and Keystone Opportunity Expansion Zones (KOEZs) stand to have certain state and local taxes eliminated. Depending on the situation, the tax burden may be reduced to zero through exemptions, deductions, abatements, and credits for the following:

  • State Taxes: Corporate Net Income Taxes, Capital Stock & Foreign Franchise Tax, Personal Income Tax, Sales & Use Tax, Bank Shares and Trust Company Shares Tax, Alternative Bank and Trust Company Shares Tax, Mutual Thrift Institutions Tax, Insurance Premiums Tax.
  • Local Taxes: Earned Income/Net Profits Tax, Business Gross Receipts, Business Occupancy, Business Privilege and Mercantile Taxes, Local Real Property Tax, Sales and Use Tax Length of Tax Relief.

The legislation does add more oversight on the part of the Department of Community and Economic Development (DCED).  DCED must provide an annual certification form to the business entity, that includes:

  • The type and duration of the zone designation.
  • The number of jobs created.
  • The number of jobs retained.
  • The amount of capital investment.
  • Any other information, conditions or requirements reasonably required by DCED.

In addition, DCED is responsible for monitoring:

  • Verifiable job creation and job retention data.
  • Information on job type and hourly wage.
  • Number of years in the program.
  • Annual, unduplicated public and private capital investment.
  • Business type and description.
  • Any other economic development assistance received from DCED.
  • Verifying that the businesses that relocate meet the increased full-time employment, capital investment or lease agreement requirements of the act.

Are you considering starting, relocating or expanding your business?  If so, you may want to consider the benefits to a KOZ, KOEZ or KOIZ.  Available sites in the Commonwealth can be searched through the Commonwealth's database.