Bill Summary – FastDemocracy

LEGISLATIVE GENERAL COUNSEL                                               H.B. 424
       6 Approved for Filing: S. Elder 6
          6 02-08-23 3:52 PM 6
              HISTORIC REHABILITATION TAX CREDIT AMENDMENTS
                                      2023 GENERAL SESSION
                                           STATE OF UTAH
                               Chief Sponsor: Carl R. Albrecht
                                 Senate Sponsor: ____________
 6
 LONG TITLE
 General Description:
        This bill modifies the tax credit related to expenditures for rehabilitating a historic
 building.
 Highlighted Provisions:
        This bill:
        < defines terms;
        < expands eligibility for the tax credit to include rehabilitation expenditures made for
 certain historic commercial buildings;
        < provides that a person may assign all or a portion of a historic rehabilitation tax
 credit; and
        < makes technical and conforming changes.
 Money Appropriated in this Bill:
        None
 Other Special Clauses:
        This bill provides a special effective date.
 Utah Code Sections Affected:
 AMENDS:
        59-7-609, as enacted by Laws of Utah 1995, Chapter 42
                                                                                                       H.B. 424
        59-10-1006, as renumbered and amended by Laws of Utah 2006, Chapter 223
27
     *HB0424*
       H.B. 424                                                                       02-08-23 3:52 PM
 Be it enacted by the Legislature of the state of Utah:
         Section 1. Section 59-7-609 is amended to read:
         59-7-609. Historic preservation credit.
         (1) As used in this section:
         (a) "Certified historic building" means a building that:
         (i) is listed on the National Register of Historic Places within three years of taking the
 credit under this section; or
         (ii) (A) is located in a National Register Historic District; and
         (B) has been designated by the State Historic Preservation Office as being of
 significance to the district.
         (b) "Commercial" means a building used to conduct business.
         (c) "Historic preservation credit" means the tax credit described in Subsection (2).
         (d) "Qualified claimant" means:
         (i) (A) a taxpayer that qualifies for a historic preservation credit; or
         (B) a person that is assigned a historic preservation credit; and
         (ii) has a written certification as provided in Subsection (3) or (4).
         (e) (i) "Qualified rehabilitation expenditures" means any amount properly chargeable to
 the rehabilitation and restoration of the physical elements of the building.
         (ii) "Qualified rehabilitation expenditures" includes the historic decorative elements,
 and the upgrading of the structural, mechanical, electrical, and plumbing systems.
         (iii) "Qualified rehabilitation expenditures" does not include expenditures related to:
         (A) the taxpayer's personal labor;
         (B) cost of acquisition of the property;
         (C) any expenditure attributable to the enlargement of an existing building;
         (D) rehabilitation of a certified historic building without the approval required in
 Subsection (3); or
         (E) any expenditure attributable to landscaping and other site features, outbuildings,
 garages, and related features.
         (f) "Residential" means a building used for residential use, either owner occupied or
 income producing.
         [(1)] (2) (a) [For tax years beginning January 1, 1993, and thereafter, there is allowed
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       02-08-23 3:52 PM                                                                            H.B. 424
 to a taxpayer subject to Section 59-7-104, as a credit against the tax due,] A taxpayer may
 claim a nonrefundable tax credit in an amount equal to 20% of qualified rehabilitation
 expenditures, [costing] if the qualified rehabilitation expenditures:
           (i) cost more than $10,000[,]; and
           (ii) are incurred in connection with any residential or commercial certified historic
 building. [When qualifying expenditures of more than $10,000 are incurred, the credit allowed
 by this section shall apply to the full amount of expenditures.]
           [(b) All rehabilitation work to which the credit may be applied shall be approved by the
 State Historic Preservation Office prior to completion of the rehabilitation project as meeting
 the Secretary of the Interior's Standards for Rehabilitation so that the office can provide
 corrective comments to the taxpayer in order to preserve the historical qualities of the
 building.]
           (b) (i) A qualified claimant may assign all or a portion of a historic preservation credit
 to which the qualified claimant is entitled.
           (ii) There is no limit on the number of transactions for the assignment of all or a
 portion of a historic preservation credit.
           (3) (a) The office shall issue a historic preservation credit certificate to a taxpayer if the
 office:
           (i) approves all rehabilitation work for which a taxpayer may claim a tax credit as
 meeting the Secretary of the Interior's Standards for Rehabilitation before completion of the
 rehabilitation project so that the office can provide corrective comments to the taxpayer to
 preserve the historic qualities of the building;
           (ii) determines that the rehabilitation project conforms with the approved rehabilitation
 work; and
           (iii) verifies the property is a residential or commercial certified historic building and
 the amount of the taxpayer's qualified rehabilitation expenditures.
           (b) The tax credit certificate shall list the amount of the historic preservation credit that
 the taxpayer is eligible to claim.
           (4) (a) To assign a historic preservation credit to another person, a qualified claimant
 shall provide a written notice to the State Historic Preservation Office, in a form established by
 the State Historic Preservation Office, that includes:
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        H.B. 424                                                                     02-08-23 3:52 PM
         (i) the qualified claimant's written certificate and other proof that the qualified claimant
 is assigning all or a portion of the historic preservation credit to which the qualified claimant is
 entitled;
         (ii) the amount of the historic preservation credit that the qualified claimant is
 assigning; and
         (iii) contact information for the person to whom the qualified claimant is assigning all
 or a portion of the historic preservation tax credit.
         (b) If the qualified claimant meets the requirements of Subsection (4)(a), the State
 Historic Preservation Office shall issue an assigned historic preservation credit certificate to the
 person identified by the qualified claimant for the amount specified in the qualified claimant's
 written notice described in Subsection (4)(a).
         (5) A person who is issued a historic preservation credit certificate in accordance with
 Subsection (4) may claim the historic preservation credit as if:
         (a) the person had met the requirements of this section to claim the historic
 preservation credit, if the person files a return under this chapter; or
         (b) the person had met the requirements of Section 59-10-1006 to claim the historic
 preservation credit under Section 59-10-1006, if the person files a return under Chapter 10,
 Individual Income Tax Act.
         (6) (a) The office shall issue a historic preservation credit certificate to a qualified
 claimant that assigns a historic preservation credit for any remaining amount of the historic
 preservation credit that was not assigned; or
         (b) if there is no credit remaining, the office shall remove the qualified claimant from
 the list of qualified claimants sent to the commission according to Subsection (8).
         [(c)] (7) [Any amount of credit remaining may be carried forward to each of the five
 taxable years following the qualified expenditures.] A qualified claimant may carry forward the
 amount of the historic preservation credit that exceeds the qualified claimant's liability for five
 taxable years after the year in which the qualified claimant claims a tax credit under this
 section.
         (8) The office shall provide the with commission an electronic report that includes for
 each qualified claimant to which the office issued a historic preservation credit certificate under
 this section for a taxable year:
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        02-08-23 3:52 PM                                                                         H.B. 424
        (a) the name of the qualified claimant;
        (b) the identifying information of the qualified claimant; and
        (c) the amount of the historic preservation credit that the qualified claimant is eligible
 to claim.
        (9) A qualified claimant shall retain a certificate issued under this section as described
 in Section 59-1-1406.
        [(d)] (10) The commission, in consultation with the [Division of State History] State
 Historic Preservation Office, shall [promulgate rules] make rules to implement this section.
        [(2) As used in this section:]
        [(a) "Certified historic building" means a building that is listed on the National
 Register of Historic Places within three years of taking the credit under this section or that is
 located in a National Register Historic District and the building has been designated by the
 Division of State History as being of significance to the district.]
        [(b) (i) "Qualified rehabilitation expenditures" means any amount properly chargeable
 to the rehabilitation and restoration of the physical elements of the building, including the
 historic decorative elements, and the upgrading of the structural, mechanical, electrical, and
 plumbing systems to applicable codes.]
        [(ii) "Qualified rehabilitation expenditures" does not include expenditures related to:]
        [(A) the taxpayer's personal labor;]
        [(B) cost of acquisition of the property;]
        [(C) any expenditure attributable to the enlargement of an existing building;]
        [(D) rehabilitation of a certified historic building without the approval required in
 Subsection (1)(b); or]
        [(E) any expenditure attributable to landscaping and other site features, outbuildings,
 garages, and related features.]
        [(c) "Residential" means a building used for residential use, either owner occupied or
 income producing.]
        Section 2. Section 59-10-1006 is amended to read:
        59-10-1006. Historic preservation tax credit.
        (1) As used in this section:
        (a) "Certified historic building" means a building that:
                                                       -5-
        H.B. 424                                                                       02-08-23 3:52 PM
         (i) is listed on the National Register of Historic Places within three years of taking the
 credit under this section; or
         (ii) (A) is located in a National Register Historic District; and
         (B) has been designated by the State Historic Preservation Office as being of
 significance to the district.
         (b) "Commercial" means a building used to conduct business.
         (c) "Historic preservation credit" means the tax credit described in Subsection (2).
         (d) "Qualified claimant" means:
         (i) (A) a claimant, estate, or trust that qualifies for a historic preservation credit; or
         (B) a person that is assigned a historic preservation credit; and
         (ii) has a written certification as provided in Subsection (3) or (4).
         (e) (i) "Qualified rehabilitation expenditures" means any amount properly chargeable to
 the rehabilitation and restoration of the physical elements of the building, including the historic
 decorative elements, and the upgrading of the structural, mechanical, electrical, and plumbing
 systems to applicable codes.
         (ii) "Qualified rehabilitation expenditures" does not include expenditures related to:
         (A) the taxpayer's personal labor;
         (B) cost of acquisition of the property;
         (C) any expenditure attributable to the enlargement of an existing building;
         (D) rehabilitation of a certified historic building without the approval required in
 Subsection (3); or
         (E) any expenditure attributable to landscaping and other site features, outbuildings,
 garages, and related features.
         (f) "Residential" means a building used for residential use, either owner occupied or
 income producing.
         [(1)] (2) (a) [For tax years beginning January 1, 1993, and thereafter, there is allowed
 to a claimant, estate, or trust,] A claimant, estate, or trust may claim as a nonrefundable tax
 credit [against the income tax due,] in an amount equal to 20% of qualified rehabilitation
 expenditures, [costing] if the qualified rehabilitation expenditures:
         (i) cost more than $10,000[,]; and
         (ii) are incurred in connection with any residential or commercial certified historic
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        02-08-23 3:52 PM                                                                           H.B. 424
 building. [When qualifying expenditures of more than $10,000 are incurred, the tax credit
 allowed by this section shall apply to the full amount of expenditures.]
         [(b) All rehabilitation work to which the tax credit may be applied shall be approved
 by the State Historic Preservation Office prior to completion of the rehabilitation project as
 meeting the Secretary of the Interior's Standards for Rehabilitation so that the office can
 provide corrective comments to the claimant, estate, or trust in order to preserve the historical
 qualities of the building.]
         (b) (i) A qualified claimant may assign all or a portion of a historic preservation credit
 to which the qualified claimant is entitled.
         (ii) There is no limit on the number of transactions for the sale or assignment of all or a
 portion of a historic preservation credit under this section.
         (3) (a) The office shall issue a historic preservation credit certificate to a claimant,
 estate, or trust if the office:
         (i) approves all rehabilitation work for which a claimant, estate, or trust may claim a
 tax credit as meeting the Secretary of the Interior's Standards for Rehabilitation before
 completion of the rehabilitation project so that the office can provide corrective comments to
 the taxpayer to preserve the historic qualities of the building;
         (ii) determines that the rehabilitation project conforms with the approved rehabilitation
 work; and
         (iii) verifies the property is a residential or commercial certified historic building and
 the amount of the taxpayer's qualified rehabilitation expenditures.
         (4) (a) To assign a historic preservation credit to another person, a qualified claimant
 shall provide written notice to the State Historic Preservation Office, in a form established by
 the State Historic Preservation Office, that includes:
         (i) the qualified claimant's written certificate and other proof that the qualified claimant
 is assigning all or a portion of the historic preservation credit to which the qualified claimant is
 entitled;
         (ii) the amount of the historic preservation credit that the qualified claimant is
 assigning; and
         (iii) contact information for the person to whom the qualified claimant is assigning all
 or a portion of the historic preservation credit.
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        H.B. 424                                                                     02-08-23 3:52 PM
         (b) If the qualified claimant meets the requirements of Subsection (4)(a), the State
 Historic Preservation Office shall issue an assigned historic preservation credit certificate to the
 person identified by the qualified claimant for the amount specified in the written notice
 described in Subsection (4)(a).
         (5) A person who is issued a historic preservation credit certificate in accordance with
 Subsection (4)(b) may claim the historic preservation credit as if:
         (a) the person had met the requirements of this section to claim the historic
 preservation credit, if the person files a return under this chapter; or
         (b) the person had met the requirements of Section 59-7-609 to claim the historic
 preservation credit under Section 59-7-609, if the person files a return under Chapter 7,
 Corporate Franchise and Income Taxes, Chapter 8, Gross Receipts Tax on Certain
 Corporations Not Required to Pay Corporate Franchise or Income Tax Act, or Chapter 9,
 Taxation of Admitted Insurers.
         [(c) Any amount of tax credit remaining may be carried forward to each of the five
 taxable years following the qualified expenditures.]
         (6) (a) The office shall issue a historic preservation credit certificate to a qualified
 claimant that assigns a historic preservation credit for any remaining amount