Bill Summary – FastDemocracy

Enrolled Copy                                                                         H.B. 269
                                 TAX CREDIT AMENDMENTS
                                       2020 GENERAL SESSION
                                            STATE OF UTAH
                               Chief Sponsor: Douglas V. Sagers
                                 Senate Sponsor: Ralph Okerlund
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 LONG TITLE
 General Description:
         This bill creates tax credit provisions related to hydrogen.
 Highlighted Provisions:
         This bill:
         < creates a nonrefundable gross receipts tax credit for certain commercial energy
 systems that use hydrogen electrolysis systems;
         < provides a process for obtaining a written certification to claim the gross receipts
 tax credit;
         < provides rulemaking authority to the Office of Energy Development and the State
 Tax Commission to administer the written certification process to claim the gross
 receipts tax credit;
         < creates nonrefundable corporate and individual income tax credits for certain
 commercial energy systems that use hydrogen electrolysis energy systems;
         < provides a process for a lessee or assignee assigned a renewable energy systems
 income tax credit to obtain a written certification;
         < defines "infrastructure" to include hydrogen fuel production or distribution projects
 for purposes of qualifying for a high cost infrastructure development tax credit; and
         < makes technical and conforming changes.
 Money Appropriated in this Bill:
         None
 Other Special Clauses:
         This bill provides retrospective operation.
       H.B. 269                                                                      Enrolled Copy
        This bill provides a special effective date.
 Utah Code Sections Affected:
 AMENDS:
        59-7-614, as last amended by Laws of Utah 2019, Chapter 247
        59-10-1014, as last amended by Laws of Utah 2019, Chapter 247
        63M-4-602, as last amended by Laws of Utah 2019, Chapter 501
 ENACTS:
        59-8-301, Utah Code Annotated 1953
38
 Be it enacted by the Legislature of the state of Utah:
        Section 1. Section 59-7-614 is amended to read:
        59-7-614. Renewable energy systems tax credits -- Definitions -- Certification --
 Rulemaking authority.
        (1) As used in this section:
        (a) (i) "Active solar system" means a system of equipment that is capable of:
        (A) collecting and converting incident solar radiation into thermal, mechanical, or
 electrical energy; and
        (B) transferring a form of energy described in Subsection (1)(a)(i)(A) by a separate
 apparatus to storage or to the point of use.
        (ii) "Active solar system" includes water heating, space heating or cooling, and
 electrical or mechanical energy generation.
        (b) "Biomass system" means a system of apparatus and equipment for use in:
        (i) converting material into biomass energy, as defined in Section 59-12-102; and
        (ii) transporting the biomass energy by separate apparatus to the point of use or storage.
        (c) "Commercial energy system" means a system that is:
        (i) (A) an active solar system;
        (B) a biomass system;
        (C) a direct use geothermal system;
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        (D) a geothermal electricity system;
        (E) a geothermal heat pump system;
        (F) a hydroenergy system;
        (G) a hydrogen electrolysis system;
        [(G)] (H) a passive solar system; or
        [(H)] (I) a wind system;
        (ii) located in the state; and
        (iii) used:
        (A) to supply energy to a commercial unit; or
        (B) as a commercial enterprise.
        (d) "Commercial enterprise" means an entity, the purpose of which is to produce
 electrical, mechanical, or thermal energy for sale from a commercial energy system.
        (e) (i) "Commercial unit" means a building or structure that an entity uses to transact
 business.
        (ii) Notwithstanding Subsection (1)(e)(i):
        (A) with respect to an active solar system used for agricultural water pumping or a
 wind system, each individual energy generating device is considered to be a commercial unit;
 or
        (B) if an energy system is the building or structure that an entity uses to transact
 business, a commercial unit is the complete energy system itself.
        (f) "Direct use geothermal system" means a system of apparatus and equipment that
 enables the direct use of geothermal energy to meet energy needs, including heating a building,
 an industrial process, and aquaculture.
        (g) "Geothermal electricity" means energy that is:
        (i) contained in heat that continuously flows outward from the earth; and
        (ii) used as a sole source of energy to produce electricity.
        (h) "Geothermal energy" means energy generated by heat that is contained in the earth.
        (i) "Geothermal heat pump system" means a system of apparatus and equipment that:
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        H.B. 269                                                                        Enrolled Copy
        (i) enables the use of thermal properties contained in the earth at temperatures well
 below 100 degrees Fahrenheit; and
        (ii) helps meet heating and cooling needs of a structure.
        (j) "Hydroenergy system" means a system of apparatus and equipment that is capable
 of:
        (i) intercepting and converting kinetic water energy into electrical or mechanical
 energy; and
        (ii) transferring this form of energy by separate apparatus to the point of use or storage.
        (k) "Hydrogen electrolysis system" means a system of apparatus and equipment that:
        (i) is separate or in conjunction with a renewable energy source; and
        (ii) uses electricity from a renewable energy source to create hydrogen gas from water.
        [(k)] (l) "Office" means the Office of Energy Development created in Section
 63M-4-401.
        [(l)] (m) (i) "Passive solar system" means a direct thermal system that utilizes the
 structure of a building and its operable components to provide for collection, storage, and
 distribution of heating or cooling during the appropriate times of the year by utilizing the
 climate resources available at the site.
        (ii) "Passive solar system" includes those portions and components of a building that
 are expressly designed and required for the collection, storage, and distribution of solar energy.
        [(m)] (n) "Photovoltaic system" means an active solar system that generates electricity
 from sunlight.
        [(n)] (o) (i) "Principal recovery portion" means the portion of a lease payment that
 constitutes the cost a person incurs in acquiring a commercial energy system.
        (ii) "Principal recovery portion" does not include:
        (A) an interest charge; or
        (B) a maintenance expense.
        (p) "Renewable energy source" means the same as that term is defined in Section
 54-17-601.
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        Enrolled Copy                                                                           H.B. 269
         [(o)] (q) "Residential energy system" means the following used to supply energy to or
 for a residential unit:
         (i) an active solar system;
         (ii) a biomass system;
         (iii) a direct use geothermal system;
         (iv) a geothermal heat pump system;
         (v) a hydroenergy system;
         (vi) a passive solar system; or
         (vii) a wind system.
         [(p)] (r) (i) "Residential unit" means a house, condominium, apartment, or similar
 dwelling unit that:
         (A) is located in the state; and
         (B) serves as a dwelling for a person, group of persons, or a family.
         (ii) "Residential unit" does not include property subject to a fee under:
         (A) Section 59-2-405;
         (B) Section 59-2-405.1;
         (C) Section 59-2-405.2;
         (D) Section 59-2-405.3; or
         (E) Section 72-10-110.5.
         [(q)] (s) "Wind system" means a system of apparatus and equipment that is capable of:
         (i) intercepting and converting wind energy into mechanical or electrical energy; and
         (ii) transferring these forms of energy by a separate apparatus to the point of use, sale,
 or storage.
         (2) A taxpayer may claim an energy system tax credit as provided in this section
 against a tax due under this chapter for a taxable year.
         (3) (a) Subject to the other provisions of this Subsection (3), a taxpayer may claim a
 nonrefundable tax credit under this Subsection (3) with respect to a residential unit the taxpayer
 owns or uses if:
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        H.B. 269                                                                          Enrolled Copy
         (i) the taxpayer:
         (A) purchases and completes a residential energy system to supply all or part of the
 energy required for the residential unit; or
         (B) participates in the financing of a residential energy system to supply all or part of
 the energy required for the residential unit;
         (ii) the residential energy system is completed and placed in service on or after January
 1, 2007; and
         (iii) the taxpayer obtains a written certification from the office in accordance with
 Subsection [(7)] (8).
         (b) (i) Subject to Subsections (3)(b)(ii) through (iv) and, as applicable, Subsection
 (3)(c) or (d), the tax credit is equal to 25% of the reasonable costs of each residential energy
 system installed with respect to each residential unit the taxpayer owns or uses.
         (ii) A tax credit under this Subsection (3) may include installation costs.
         (iii) A taxpayer may claim a tax credit under this Subsection (3) for the taxable year in
 which the residential energy system is completed and placed in service.
         (iv) If the amount of a tax credit under this Subsection (3) exceeds a taxpayer's tax
 liability under this chapter for a taxable year, the taxpayer may carry forward the amount of the
 tax credit exceeding the liability [may be carried forward] for a period that does not exceed the
 next four taxable years.
         (c) The total amount of tax credit a taxpayer may claim under this Subsection (3) for a
 residential energy system, other than a photovoltaic system, may not exceed $2,000 per
 residential unit.
         (d) The total amount of tax credit a taxpayer may claim under this Subsection (3) for a
 photovoltaic system may not exceed:
         (i) for a system installed on or after January 1, 2018, but on or before December 31,
 2020, $1,600;
         (ii) for a system installed on or after January 1, 2021, but on or before December 31,
 2021, $1,200;
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        Enrolled Copy                                                                           H.B. 269
         (iii) for a system installed on or after January 1, 2022, but on or before December 31,
 2022, $800;
         (iv) for a system installed on or after January 1, 2023, but on or before December 31,
 2023, $400; and
         (v) for a system installed on or after January 1, 2024, $0.
         (e) If a taxpayer sells a residential unit to another person before the taxpayer claims the
 tax credit under this Subsection (3):
         (i) the taxpayer may assign the tax credit to the other person; and
         (ii) (A) if the other person files a return under this chapter, the other person may claim
 the tax credit under this section as if the other person had met the requirements of this section
 to claim the tax credit; or
         (B) if the other person files a return under Chapter 10, Individual Income Tax Act, the
 other person may claim the tax credit under Section 59-10-1014 as if the other person had met
 the requirements of Section 59-10-1014 to claim the tax credit.
         (4) (a) Subject to the other provisions of this Subsection (4), a taxpayer may claim a
 refundable tax credit under this Subsection (4) with respect to a commercial energy system if:
         (i) the commercial energy system does not use:
         (A) wind, geothermal electricity, solar, or biomass equipment capable of producing a
 total of 660 or more kilowatts of electricity; or
         (B) solar equipment capable of producing 2,000 or more kilowatts of electricity;
         (ii) the taxpayer purchases or participates in the financing of the commercial energy
 system;
         (iii) (A) the commercial energy system supplies all or part of the energy required by
 commercial units owned or used by the taxpayer; or
         (B) the taxpayer sells all or part of the energy produced by the commercial energy
 system as a commercial enterprise;
         (iv) the commercial energy system is completed and placed in service on or after
 January 1, 2007; and
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        H.B. 269                                                                          Enrolled Copy
        (v) the taxpayer obtains a written certification from the office in accordance with
 Subsection [(7)] (8).
        (b) (i) Subject to Subsections (4)(b)(ii) through [(v)] (iv), the tax credit is equal to 10%
 of the reasonable costs of the commercial energy system.
        (ii) A tax credit under this Subsection (4) may include installation costs.
        (iii) A taxpayer may claim a tax credit under this Subsection (4) for the taxable year in
 which the commercial energy system is completed and placed in service.
        [(iv) A tax credit under this Subsection (4) may not be carried forward or carried back.]
        [(v)] (iv) The total amount of tax credit a taxpayer may claim under this Subsection (4)
 may not exceed $50,000 per commercial unit.
        (c) (i) Subject to Subsections (4)(c)(ii) and (iii), a taxpayer that is a lessee of a
 commercial energy system installed on a commercial unit may claim a tax credit under this
 Subsection (4) if the taxpayer [confirms that the lessor irrevocably elects not to claim the tax
 credit] obtains a written certification from the office in accordance with Subsection (8).
        (ii) A taxpayer described in Subsection (4)(c)(i) may claim as a tax credit under this
 Subsection (4) only the principal recovery portion of the lease payments.
        (iii) A taxpayer described in Subsection (4)(c)(i) may claim a tax credit under this
 Subsection (4) for a period that does not exceed seven taxable years after the [date] day on
 which the lease begins, as stated in the lease agreement.
        (5) (a) Subject to the other provisions of this Subsection (5), a taxpayer may claim a
 refundable tax credit under this Subsection (5) with respect to a commercial energy system if:
        (i) the commercial energy system uses wind, geothermal electricity, or biomass
 equipment capable of producing a total of 660 or more kilowatts of electricity;
        (ii) (A) the commercial energy system supplies all or part of the energy required by
 commercial units owned or used by the taxpayer; or
        (B) the taxpayer sells all or part of the energy produced by the commercial energy
 system as a commercial enterprise;
        (iii) the commercial energy system is completed and placed in service on or after
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        Enrolled Copy                                                                            H.B. 269
 January 1, 2007; and
        (iv) the taxpayer obtains a written certification from the office in accordance with
 Subsection [(7)] (8).
        (b) (i) Subject to [Subsections] Subsection (5)(b)(ii) [and (iii)], a tax credit under this
 Subsection (5) is equal to the product of:
        (A) 0.35 cents; and
        (B) the kilowatt hours of electricity produced and used or sold during the taxable year.
        (ii) A tax credit under this Subsection (5) may be claimed for production occurring
 during a period of 48 months beginning with the month in which the commercial energy
 system is placed in commercial service.
        [(iii) A tax credit under this Subsection (5) may not be carried forward or carried back.]
        (c) A taxpayer that is a lessee of a commercial energy system installed on a commercial
 unit may claim a tax credit under this Subsection (5) if the taxpayer [confirms that the lessor
 irrevocably elects not to claim the tax credit] obtains a written certification from the office in
 accordance with Subsection (8).
        (6) (a) Subject to the other provisions of this Subsection (6), a taxpayer may claim a
 refundable tax credit as provided in this Subsection (6) if:
        (i) the taxpayer owns a commercial energy system that uses solar equipment capable of
 producing a total of 660 or more kilowatts of electricity;
        (ii) (A) the commercial energy system supplies all or part of the energy required by
 commercial units owned or used by the taxpayer; or
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