The mission of the Business Acquisition and Growth Incentive Program (BAGIP) is to encourage economic growth, sustain current jobs and tax revenue, and promote the turn around of at risk businesses in the City of Salem. The BAGIP provides incentives against Net Profits Taxes for three (3) years if employment levels are maintained within guidelines as set forth below, or for five (5) years with significant employment growth as determined by the Program Oversight Committee. The Program Oversight Committee shall conduct an annual review to determine continued eligibility in the Program based on these requirements. The BAGIP applies to newly acquired businesses in the City of Salem that have not paid Net Profits Tax due to poor business performance in the two (2) years immediately prior to acquisition by new owners.
(a) Basic Eligibility Requirements.
(1) Business must employ people pursuant to the following guidelines:
# of Jobs | Business Profits Tax Incentive Payment |
4 to 6 | 60% |
7 to 9 | 80% |
10+ | 100% |
(2) Business must not have paid corporate profits tax in the past two (2) years immediately prior to the year of acquisition if a C corp., or no personal city income taxes due to business operations of owners or members if S corp. or LLC.
(3) Business must have operated in City of Salem for the immediate two (2) years prior to year of acquisition.
(4) Sale of business must be to new owners in an arms length sale or must involve a significant reformulation of ownership as determined by the Program Oversight Committee.
(5) Application for program must occur within twelve (12) months of acquisition.
(6) Company payroll and employee count must remain within guidelines set by Program Oversight Committee upon application in order to maintain participation in the BAGIP for three (3) years
(7) Using company payroll and employee head count one (1) year prior to the acquisition date as the test data, company employee head count and payroll must increase at least every two (2) years from Program Start Date to maintain continued participation for five (5) years.
(8) If total head count at reporting period is less than or equal to total head count at application, or if total tax collections for the tax paying entity at reporting period is determined to be less than or equal to total tax collections at application, business may be deemed to lose eligibility for continuance in the BAGIP. The test figures for this determination will be provided by the Program Oversight Committee at application reference to City Council.
(b) Existing Delinquent Taxes at Program Acceptance. If an applicant business has not paid corporate net profit tax due, or personal income tax due from business operation if an S Corp or LLC, the Program Oversight Committee may accept an acquisition transaction into the BAGIP if the Program Oversight Committee is satisfied that the delinquency is due to poor financial conditions of the company or owner. Acceptance into the program does not absolve the corporate or prior owner from obligations to pay delinquent taxes which may be requested from the sale of the business as a condition of acceptance into the BAGIP at the discretion of the Program Oversight Committee or the Salem City Council.
(Ord. 210119-01. Passed 1-19-21.)