LEGISLATIVE GENERAL COUNSEL H.B. 407
6 Approved for Filing: A.V. Arthur 6 3rd Sub. (Cherry)
6 02-20-23 5:19 PM 6
Representative Kay J. Christofferson proposes the following substitute bill:
1 INCENTIVES AMENDMENTS
2 2023 GENERAL SESSION
3 STATE OF UTAH
4 Chief Sponsor: Kay J. Christofferson
5 Senate Sponsor: Lincoln Fillmore
6
7 LONG TITLE
8 General Description:
9 This bill amends provisions related to tax credits.
10 Highlighted Provisions:
11 This bill:
12 < requires each state agency that issues a tax credit certificate for a tax credit to
13 provide the State Tax Commission with an electronic link to a webpage where the
14 state agency lists the names of the claimants and amounts of tax credits the
15 claimants are eligible to claim;
16 < requires the State Tax Commission to create a webpage that links to each state
17 agency's list of tax credit claimants;
18 < requires the Revenue and Taxation Interim Committee to:
19 C evaluate whether performance metrics or reporting requirements for the tax
20 credit would improve the committee's evaluation of the benefits to the taxpayer 3rd Sub. H.B. 407
21 and the state from the tax credit and, if so, prepare legislation recommending
22 specific performance metrics or reporting requirements; and
23 C evaluate the effectiveness of the process for claiming a research activities tax
24 credit, including receiving recommendations for improvement from the State
25 Tax Commission, and prepare legislation if the committee recommends any
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26 changes to the process;
27 < modifies reporting and study requirements related to repealed income tax credits;
28 < creates a statutory certificate process for the historic preservation tax credits;
29 < requires the State Historic Preservation Office to report the number of estimated
30 new jobs created by approved historic rehabilitation work in the Department of
31 Cultural and Community Engagement's annual report;
32 < modifies the corporate and individual recycling market development zone tax
33 credits to eliminate the expenditures credit;
34 < clarifies the production capacity requirements for solar equipment to be eligible for
35 the renewable energy systems tax credits;
36 < requires the Governor's Office of Economic Opportunity to report in the annual
37 report the amount of new state revenue generated from motion picture projects
38 within the state;
39 < repeals the following individual income tax credits:
40 C qualifying solar projects; and
41 C investment in life sciences establishments;
42 < repeals the Technology and Life Science Economic Development Act;
43 < repeals the corporate and individual alternative energy development tax credits;
44 < repeals the Alternative Energy Development Tax Credit Act; and
45 < makes technical and conforming changes.
46 Money Appropriated in this Bill:
47 None
48 Other Special Clauses:
49 This bill provides a special effective date.
50 Utah Code Sections Affected:
51 AMENDS:
52 59-7-159, as last amended by Laws of Utah 2022, Chapters 264, 274
53 59-7-610, as last amended by Laws of Utah 2021, Chapter 367
54 59-7-614, as last amended by Laws of Utah 2022, Chapter 274
55 59-10-137, as last amended by Laws of Utah 2022, Chapter 264
56 59-10-1002.2, as last amended by Laws of Utah 2022, Chapter 12
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57 59-10-1007, as last amended by Laws of Utah 2021, Chapter 367
58 59-10-1014, as last amended by Laws of Utah 2021, Chapter 280
59 59-10-1106, as last amended by Laws of Utah 2021, Chapters 280, 374
60 63N-8-105, as last amended by Laws of Utah 2021, Chapter 282
61 79-6-401, as last amended by Laws of Utah 2022, Chapter 322
62 ENACTS:
63 59-1-214, Utah Code Annotated 1953
64 REPEALS AND REENACTS:
65 59-7-609, as enacted by Laws of Utah 1995, Chapter 42
66 59-10-1006, as renumbered and amended by Laws of Utah 2006, Chapter 223
67 REPEALS:
68 59-7-614.7, as last amended by Laws of Utah 2021, Chapter 280
69 59-10-1024, as last amended by Laws of Utah 2021, Chapter 280
70 59-10-1025, as last amended by Laws of Utah 2019, Chapter 465
71 59-10-1029, as last amended by Laws of Utah 2021, Chapter 280
72 63N-2-801, as renumbered and amended by Laws of Utah 2015, Chapter 283
73 63N-2-802, as last amended by Laws of Utah 2016, Chapter 354
74 63N-2-803, as last amended by Laws of Utah 2016, Chapter 354
75 63N-2-804, as renumbered and amended by Laws of Utah 2015, Chapter 283
76 63N-2-805, as renumbered and amended by Laws of Utah 2015, Chapter 283
77 63N-2-806, as last amended by Laws of Utah 2016, Chapter 354
78 63N-2-807, as renumbered and amended by Laws of Utah 2015, Chapter 283
79 63N-2-808, as last amended by Laws of Utah 2021, Chapter 282
80 63N-2-809, as renumbered and amended by Laws of Utah 2015, Chapter 283
81 63N-2-810, as last amended by Laws of Utah 2022, Chapter 362
82 63N-2-811, as last amended by Laws of Utah 2021, Chapter 382
83 79-6-501, as renumbered and amended by Laws of Utah 2021, Chapter 280
84 79-6-502, as renumbered and amended by Laws of Utah 2021, Chapter 280
85 79-6-503, as last amended by Laws of Utah 2021, Chapter 64 and renumbered and
86 amended by Laws of Utah 2021, Chapter 280
87 79-6-504, as renumbered and amended by Laws of Utah 2021, Chapter 280
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88 79-6-505, as last amended by Laws of Utah 2022, Chapter 68
89
90 Be it enacted by the Legislature of the state of Utah:
91 Section 1. Section 59-1-214 is enacted to read:
92 59-1-214. Disclosure of tax credit recipients.
93 (1) As used in this section:
94 (a) "Recipient" means a taxpayer, a claimant, an estate, or a trust that:
95 (i) applies for a tax credit certificate on or after January 1, 2024; and
96 (ii) is eligible to claim a tax credit in the amount for which a tax credit certificate is
97 issued.
98 (b) "Tax credit certificate" means a document that:
99 (i) a state agency is required by statute to issue upon an application by a taxpayer, a
100 claimant, an estate, or a trust;
101 (ii) verifies a taxpayer's, a claimant's, an estate's, or a trust's eligibility to claim a tax
102 credit;
103 (iii) lists the amount of tax credit that a taxpayer, a claimant, an estate, or a trust may
104 claim for the taxable year; and
105 (iv) without which the taxpayer, the claimant, the estate, or the trust may not claim the
106 tax credit.
107 (2) Each state agency shall provide the commission with a link to a webpage where the
108 state agency discloses, for each tax credit for which the state agency issues a tax credit
109 certificate:
110 (a) the names of each recipient of a tax credit certificate; and
111 (b) the amount of tax credit listed on the certificate.
112 (3) The Office of Energy Development is not required to comply with Subsection (2)
113 for a tax credit described in:
114 (a) Subsection 59-7-614(3); or
115 (b) Section 59-10-1014.
116 (4) The commission shall create a single webpage on the commission's website that
117 links to each state agency's webpage containing the information described in Subsection (2).
118 Section 2. Section 59-7-159 is amended to read:
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119 59-7-159. Review of credits allowed under this chapter.
120 (1) As used in this section, "committee" means the Revenue and Taxation Interim
121 Committee.
122 (2) (a) The committee shall review the tax credits described in this chapter as provided
123 in Subsection (3) and make recommendations concerning whether the tax credits should be
124 continued, modified, or repealed.
125 (b) In conducting the review required under Subsection (2)(a), the committee shall:
126 (i) schedule time on at least one committee agenda to conduct the review;
127 (ii) invite state agencies, individuals, and organizations concerned with the tax credit
128 under review to provide testimony;
129 (iii) (A) invite the Governor's Office of Economic Opportunity to present a summary
130 and analysis of the information for each tax credit regarding which the Governor's Office of
131 Economic Opportunity is required to make a report under this chapter; and
132 (B) invite the Office of the Legislative Fiscal Analyst to present a summary and
133 analysis of the information for each tax credit regarding which the Office of the Legislative
134 Fiscal Analyst is required to make a report under this chapter;
135 (iv) ensure that the committee's recommendations described in this section include an
136 evaluation of:
137 (A) the cost of the tax credit to the state;
138 (B) the purpose and effectiveness of the tax credit; and
139 (C) the extent to which the state benefits from the tax credit; [and]
140 (v) evaluate whether performance metrics or reporting requirements for the tax credit
141 would improve the committee's evaluation of the benefits to the taxpayer and the state from the
142 tax credit; and
143 (vi) undertake other review efforts as determined by the committee chairs or as
144 otherwise required by law.
145 (c) The committee shall prepare legislation for consideration by the Legislature at the
146 next general session recommending specific performance metrics or reporting requirements for
147 any tax credit that the committee determines meets the requirement described in Subsection
148 (2)(b)(v).
149 (3) (a) On or before November 30, 2017, and every three years after 2017, the
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150 committee shall conduct the review required under Subsection (2) of the tax credits allowed
151 under the following sections:
152 (i) Section 59-7-601;
153 (ii) Section 59-7-607;
154 (iii) Section 59-7-612;
155 (iv) Section 59-7-614.1; and
156 (v) Section 59-7-614.5.
157 (b) On or before November 30, 2018, and every three years after 2018, the committee
158 shall conduct the review required under Subsection (2) of the tax credits allowed under the
159 following sections:
160 (i) Section 59-7-609;
161 (ii) Section 59-7-614.2;
162 (iii) Section 59-7-614.10; and
163 (iv) Section 59-7-619.
164 (c) On or before November 30, 2019, and every three years after 2019, the committee
165 shall conduct the review required under Subsection (2) of the tax credits allowed under the
166 following sections:
167 (i) Section 59-7-610; and
168 (ii) Section 59-7-614[; and].
169 [(iii) Section 59-7-614.7.]
170 (d) (i) In addition to the reviews described in this Subsection (3), the committee shall
171 conduct a review of a tax credit described in this chapter that is enacted on or after January 1,
172 2017.
173 (ii) The committee shall complete a review described in this Subsection (3)(d) three
174 years after the effective date of the tax credit and every three years after the initial review date.
175 (4) On or before November 30, 2023, the committee shall:
176 (a) evaluate the effectiveness of the current process for issuing a tax credit described in
177 Section 59-7-612;
178 (b) receive input from the commission regarding improvements to the process for
179 issuing a tax credit described in Section 59-7-612; and
180 (c) if the committee makes a recommendation for improving the process for issuing a
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181 tax credit described in Section 59-7-612, prepare legislation for consideration by the
182 Legislature at the next general session.
183 Section 3. Section 59-7-609 is repealed and reenacted to read:
184 59-7-609. Historic preservation credit.
185 (1) As used in this section:
186 (a) "Certified historic building" means a building that:
187 (i) is listed on the National Register of Historic Places within three years of taking the
188 credit under this section; or
189 (ii) (A) is located in a National Register Historic District; and
190 (B) has been designated by the office as being of significance to the district.
191 (b) "Office" means the State Historic Preservation Office.
192 (c) (i) "Qualified rehabilitation expenditures" means any amount properly chargeable to
193 the rehabilitation and restoration of the physical elements of the building.
194 (ii) "Qualified rehabilitation expenditures" includes the historic decorative elements
195 and the upgrading of the structural, mechanical, electrical, and plumbing systems.
196 (iii) "Qualified rehabilitation expenditures" does not include expenditures related to:
197 (A) the taxpayer's personal labor;
198 (B) cost of acquisition of the property;
199 (C) any expenditure attributable to the enlargement of an existing building;
200 (D) rehabilitation of a certified historic building without the approval required in
201 Subsection (3)(a)(i);
202 (E) an expenditure attributable to landscaping or other site features, outbuildings,
203 garages, and related features; or
204 (F) demolition and removal costs for an existing building on a property site.
205 (d) "Residential" means a building used for residential use, either owner occupied or
206 income producing.
207 (2) A taxpayer may claim a nonrefundable tax credit in an amount equal to 20% of
208 qualified rehabilitation expenditures if:
209 (a) the qualified rehabilitation expenditures cost more than $10,000;
210 (b) the qualified rehabilitation expenditures are incurred in connection with a
211 residential certified historic building; and
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212 (c) the taxpayer has a written tax credit certificate issued by the office in accordance
213 with Subsection (3).
214 (3) (a) The office shall issue a tax credit certificate if the office:
215 (i) approves all rehabilitation work for which a taxpayer may claim a tax credit as
216 meeting the Secretary of the Interior's Standards for Rehabilitation before completion of the
217 rehabilitation project so that the office can provide corrective comments to the taxpayer to
218 preserve the historic qualities of the building;
219 (ii) determines that the rehabilitation project conforms with the approved rehabilitation
220 work; and
221 (iii) verifies the property is a residential certified historic building and the amount of
222 the taxpayer's qualified rehabilitation expenditures.
223 (b) The tax credit certificate shall list the amount of the tax credit that the taxpayer is
224 eligible to claim.
225 (c) A taxpayer that receives a tax credit certificate under this section shall retain the tax
226 credit certificate for the same time period a person is required to keep books and records under
227 Section 59-1-1406.
228 (d) The office shall provide the commission with an electronic report that includes for
229 each taxpayer to which the office issued a tax credit certificate under this section for a taxable
230 year:
231 (i) the name of the taxpayer;
232 (ii) the identifying information of the taxpayer; and
233 (iii) the amount of tax credit that the taxpayer is eligible to claim.
234 (4) A taxpayer may carry forward the amount of the tax credit that exceeds the
235 taxpayer's tax liability for five taxable years after the year in which the taxpayer claims a tax
236 credit under this section.
237 (5) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
238 commission, in consultation with the office, shall make rules to implement this section.
239 (6) The office shall include the number of estimated new jobs created in the state from
240 rehabilitation work in the annual report described in Section 9-1-208.
241 Section 4. Section 59-7-610 is amended to read:
242 59-7-610. Recycling market development zones tax credits.
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243 (1) Subject to other provisions of this section, a taxpayer that is a business operating in