Bill Summary – FastDemocracy

LEGISLATIVE GENERAL COUNSEL                                             H.B. 262
Approved for Filing: A.V. Arthur 6
          6 01-28-22 3:01 PM 6
                                 INCENTIVES AMENDMENTS
                                         2022 GENERAL SESSION
                                            STATE OF UTAH
                            Chief Sponsor: Kay J. Christofferson
                                 Senate Sponsor: ____________
 6
 LONG TITLE
 General Description:
        This bill amends provisions related to tax credits and incentives.
 Highlighted Provisions:
        This bill:
        < provides for the treatment of a carry forward when an income tax credit expires or
 repeals;
        < modifies the research activities tax credit by:
            C   eliminating the credit equal to 7.5% of qualified research expenses; and
            C   requiring the State Tax Commission to provide, and the taxpayer to complete
 and retain, a worksheet to calculate the credits;
        < modifies the formula for calculating the individual historic preservation tax credit;
        < modifies the formulas for calculating the corporate and individual renewable energy
 system tax credits;
        < modifies the criteria for qualifying for an enterprise zone tax credit;
        < sets an end date for entering or extending contracts authorizing an economic
 development tax increment financing tax credit;
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        < repeals the following corporate income tax credits:
            C   interest income from state and federal securities;
            C   historic preservation;
            C   renewable energy system for a residential unit;
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           C   alternative energy development; and
           C   recycling market development zone;
       < repeals the following individual income tax credits:
           C   recycling market development zone;
           C   qualifying solar projects;
           C   investment in life science establishments; and
           C   alternative energy development;
       < repeals the Technology and Life Science Economic Development Act;
       < repeals the motion pictures incentives;
       < repeals the Alternative Energy Development Tax Credit Act;
       < modifies reporting and study requirements related to repealed income tax credits;
 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:
       19-13-102, as renumbered and amended by Laws of Utah 2020, Chapter 360
       19-13-109, as renumbered and amended by Laws of Utah 2020, Chapter 360
       59-2-102, as last amended by Laws of Utah 2021, Chapter 314
       59-7-159, as last amended by Laws of Utah 2021, Chapters 282 and 367
       59-7-612, as last amended by Laws of Utah 2016, Third Special Session, Chapter 1
       59-7-614, as last amended by Laws of Utah 2021, Chapters 280 and 374
       59-7-614.2, as last amended by Laws of Utah 2021, Chapter 282
       59-7-624, as last amended by Laws of Utah 2021, Chapter 282
       59-7-903, as last amended by Laws of Utah 2016, Chapters 64 and 135
       59-10-137, as last amended by Laws of Utah 2021, Chapters 282 and 367
       59-10-1002.2, as last amended by Laws of Utah 2021, Chapters 68 and 428
       59-10-1006, as renumbered and amended by Laws of Utah 2006, Chapter 223
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      H.B. 262                                                             01-28-22 3:01 PM
       59-10-1012, as last amended by Laws of Utah 2016, Third Special Session, Chapter 1
       59-10-1014, as last amended by Laws of Utah 2021, Chapter 280
       59-10-1106, as last amended by Laws of Utah 2021, Chapters 280 and 374
       59-10-1107, as last amended by Laws of Utah 2021, Chapter 282
       59-10-1112, as last amended by Laws of Utah 2021, Chapter 282
       63J-1-602.1, as last amended by Laws of Utah 2021, Chapters 280, 382, 401, and 438
       63N-2-104, as last amended by Laws of Utah 2021, Chapters 282, 381 and last
 amended by Coordination Clause, Laws of Utah 2021, Chapter 282
       63N-2-106, as last amended by Laws of Utah 2021, Chapter 282
       63N-2-213, as last amended by Laws of Utah 2021, Chapter 282
       63N-2-304, as last amended by Laws of Utah 2019, Chapter 247
       79-6-401, as renumbered and amended by Laws of Utah 2021, Chapter 280
 ENACTS:
       59-7-538, Utah Code Annotated 1953
       59-10-552, Utah Code Annotated 1953
 REPEALS:
       19-13-110, as renumbered and amended by Laws of Utah 2020, Chapter 360
       59-7-601, as last amended by Laws of Utah 2005, Chapter 105
       59-7-609, as enacted by Laws of Utah 1995, Chapter 42
       59-7-610, as last amended by Laws of Utah 2021, Chapter 367
       59-7-614.5, as last amended by Laws of Utah 2021, Chapter 282
       59-7-614.7, as last amended by Laws of Utah 2021, Chapter 280
       59-10-1007, as last amended by Laws of Utah 2021, Chapter 367
       59-10-1024, as last amended by Laws of Utah 2021, Chapter 280
       59-10-1025, as last amended by Laws of Utah 2019, Chapter 465
       59-10-1029, as last amended by Laws of Utah 2021, Chapter 280
       59-10-1108, as last amended by Laws of Utah 2021, Chapter 282
       63N-2-801, as renumbered and amended by Laws of Utah 2015, Chapter 283
       63N-2-802, as last amended by Laws of Utah 2016, Chapter 354
       63N-2-803, as last amended by Laws of Utah 2016, Chapter 354
       63N-2-804, as renumbered and amended by Laws of Utah 2015, Chapter 283
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        01-28-22 3:01 PM                                                                       H.B. 262
        63N-2-805, as renumbered and amended by Laws of Utah 2015, Chapter 283
        63N-2-806, as last amended by Laws of Utah 2016, Chapter 354
        63N-2-807, as renumbered and amended by Laws of Utah 2015, Chapter 283
        63N-2-808, as last amended by Laws of Utah 2021, Chapter 282
        63N-2-809, as renumbered and amended by Laws of Utah 2015, Chapter 283
        63N-2-810, as last amended by Laws of Utah 2021, Chapter 282
        63N-2-811, as last amended by Laws of Utah 2021, Chapter 382
        63N-8-101, as renumbered and amended by Laws of Utah 2015, Chapter 283
        63N-8-102, as last amended by Laws of Utah 2021, Chapter 282
        63N-8-103, as last amended by Laws of Utah 2021, Chapters 282 and 436
        63N-8-104, as last amended by Laws of Utah 2021, Chapter 282
        63N-8-105, as last amended by Laws of Utah 2021, Chapter 282
        79-6-501, as renumbered and amended by Laws of Utah 2021, Chapter 280
        79-6-502, as renumbered and amended by Laws of Utah 2021, Chapter 280
        79-6-503, as last amended by Laws of Utah 2021, Chapter 64 and renumbered and
 amended by Laws of Utah 2021, Chapter 280
        79-6-504, as renumbered and amended by Laws of Utah 2021, Chapter 280
        79-6-505, as renumbered and amended by Laws of Utah 2021, Chapter 280
108
 Be it enacted by the Legislature of the state of Utah:
        Section 1. Section 19-13-102 is amended to read:
        19-13-102. Definitions.
        As used in this part:
        (1) "Composting" means the controlled decay of landscape waste or sewage sludge and
 organic industrial waste, or a mixture of these, by the action of bacteria, fungi, molds, and other
 organisms.
        (2) "Postconsumer waste material" means any product generated by a business or
 consumer that has served its intended end use, and that has been separated from solid waste for
 the purposes of collection, recycling, and disposition and that does not include secondary waste
 material.
        (3) (a) "Recovered materials" means waste materials and by-products that have been
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        H.B. 262                                                                     01-28-22 3:01 PM
 recovered or diverted from solid waste.
        (b) "Recovered materials" does not include those materials and by-products generated
 from, and commonly reused within, an original manufacturing process.
        (4) (a) "Recycling" means the diversion of materials from the solid waste stream and
 the beneficial use of the materials and includes a series of activities by which materials that
 would become or otherwise remain waste are diverted from the waste stream for collection,
 separation, and processing, and are used as raw materials or feedstocks in lieu of or in addition
 to virgin materials in the manufacture of goods sold or distributed in commerce or the reuse of
 the materials as substitutes for goods made from virgin materials.
        (b) "Recycling" does not include burning municipal solid waste for energy recovery.
        (5) "Recycling market development zone" or "zone" means an area designated by the
 office as meeting the requirements of this part.
        (6) (a) "Secondary waste material" means industrial by-products that go to disposal
 facilities and waste generated after completion of a manufacturing process.
        (b) "Secondary waste material" does not include internally generated scrap commonly
 returned to industrial or manufacturing processes, such as home scrap and mill broke.
        [(7) "Tax incentive" means a nonrefundable tax credit available under Section 59-7-610
 or 59-10-1007.]
        Section 2. Section 19-13-109 is amended to read:
        19-13-109. Revocation of designations.
        (1) The department may revoke the designation of a recycling market development
 zone [if no businesses utilize the tax incentives during any calendar year].
        (2) Before revocation of the zone, the department shall conduct a public hearing within
 a reasonable distance of the zone to determine reasons for inactivity and explore possible
 alternative actions.
        Section 3. Section 59-2-102 is amended to read:
        59-2-102. Definitions.
        As used in this chapter:
        (1) (a) "Acquisition cost" means any cost required to put an item of tangible personal
 property into service.
        (b) "Acquisition cost" includes:
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        01-28-22 3:01 PM                                                                          H.B. 262
         (i) the purchase price of a new or used item;
         (ii) the cost of freight, shipping, loading at origin, unloading at destination, crating,
 skidding, or any other applicable cost of shipping;
         (iii) the cost of installation, engineering, rigging, erection, or assembly, including
 foundations, pilings, utility connections, or similar costs; and
         (iv) sales and use taxes.
         (2) "Aerial applicator" means aircraft or rotorcraft used exclusively for the purpose of
 engaging in dispensing activities directly affecting agriculture or horticulture with an
 airworthiness certificate from the Federal Aviation Administration certifying the aircraft or
 rotorcraft's use for agricultural and pest control purposes.
         (3) "Air charter service" means an air carrier operation that requires the customer to
 hire an entire aircraft rather than book passage in whatever capacity is available on a scheduled
 trip.
         (4) "Air contract service" means an air carrier operation available only to customers
 that engage the services of the carrier through a contractual agreement and excess capacity on
 any trip and is not available to the public at large.
         (5) "Aircraft" means the same as that term is defined in Section 72-10-102.
         (6) (a) Except as provided in Subsection (6)(b), "airline" means an air carrier that:
         (i) operates:
         (A) on an interstate route; and
         (B) on a scheduled basis; and
         (ii) offers to fly one or more passengers or cargo on the basis of available capacity on a
 regularly scheduled route.
         (b) "Airline" does not include an:
         (i) air charter service; or
         (ii) air contract service.
         (7) "Assessment roll" or "assessment book" means a permanent record of the
 assessment of property as assessed by the county assessor and the commission and may be
 maintained manually or as a computerized file as a consolidated record or as multiple records
 by type, classification, or categories.
         (8) "Base parcel" means a parcel of property that was legally:
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        H.B. 262                                                                  01-28-22 3:01 PM
        (a) subdivided into two or more lots, parcels, or other divisions of land; or
        (b) (i) combined with one or more other parcels of property; and
        (ii) subdivided into two or more lots, parcels, or other divisions of land.
        (9) (a) "Certified revenue levy" means a property tax levy that provides an amount of
 ad valorem property tax revenue equal to the sum of:
        (i) the amount of ad valorem property tax revenue to be generated statewide in the
 previous year from imposing a multicounty assessing and collecting levy, as specified in
 Section 59-2-1602; and
        (ii) the product of:
        (A) eligible new growth, as defined in Section 59-2-924; and
        (B) the multicounty assessing and collecting levy certified by the commission for the
 previous year.
        (b) For purposes of this Subsection (9), "ad valorem property tax revenue" does not
 include property tax revenue received by a taxing entity from personal property that is:
        (i) assessed by a county assessor in accordance with Part 3, County Assessment; and
        (ii) semiconductor manufacturing equipment.
        (c) For purposes of calculating the certified revenue levy described in this Subsection
 (9), the commission shall use:
        (i) the taxable value of real property assessed by a county assessor contained on the
 assessment roll;
        (ii) the taxable value of real and personal property assessed by the commission; and
        (iii) the taxable year end value of personal property assessed by a county assessor
 contained on the prior year's assessment roll.
        (10) "County-assessed commercial vehicle" means:
        (a) any commercial vehicle, trailer, or semitrailer that is not apportioned under Section
 41-1a-301 and is not operated interstate to transport the vehicle owner's goods or property in
 furtherance of the owner's commercial enterprise;
        (b) any passenger vehicle owned by a business and used by its employees for
 transportation as a company car or vanpool vehicle; and
        (c) vehicles that are:
        (i) especially constructed for towing or wrecking, and that are not otherwise used to
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        01-28-22 3:01 PM                                                                       H.B. 262
 transport goods, merchandise, or people for compensation;
        (ii) used or licensed as taxicabs or limousines;
        (iii) used as rental passenger cars, travel trailers, or motor homes;
        (iv) used or licensed in this state for use as ambulances or hearses;
        (v) especially designed and used for garbage and rubbish collection; or
        (vi) used exclusively to transport students or their instructors to or from any private,
 public, or religious school or school activities.
        (11) "Eligible judgment" means a final and unappealable judgment or order under
 Section 59-2-1330:
        (a) that became a final and unappealable judgment or order no more than 14 months
 before the day on which the notice described in Section 59-2-919.1 is required to be provided;
 and
        (b) for which a taxing entity's share of the final and unappealable judgment or order is
 greater than or equal to the lesser of:
        (i) $5,000; or
        (ii) 2.5% of the total ad valorem property taxes collected by the taxing entity in the
 previous fiscal year.
        (12) (a) "Escaped property" means any property, whether personal, land, or any
 improvements to the property, that is subject to taxation and is:
        (i) inadvertently omitted from the tax rolls, assigned to the incorrect parcel, or assessed
 to the wrong taxpayer by the assessing authority;
        (ii) undervalued or omitted from the tax rolls because of the failure of the taxpayer to
 comply with the reporting requirements of this chapter; or
        (iii) undervalued because of errors made by the assessing authority based upon
 incomplete or erroneous information furnished by the taxpayer.
        (b) "Escaped property" does not include property that is undervalued because of the use
 of a different valuation methodology or because of a different application of the same valuation
 methodology.
        (13)(a) "Fair market value" means the amount at which property would change hands
 between a willing buyer and a willing seller, neither being unde