First Substitute S.B. 27

Senator Howard A. Stephenson proposes to substitute the following bill:

1 INDIVIDUAL INCOME TAX AND CORPORATE FRANCHISE AND
2 INCOME TAX CREDITS FOR MINING ESTABLISHMENTS
3 2001 GENERAL SESSION
4 STATE OF UTAH
5 Sponsor: Howard A. Stephenson
6 Mike Dmitrich
Ron Allen
L. Steven Poulton

7 This act modifies the Individual Income Tax Act and Corporate Franchise and Income Taxes
8 to enact refundable tax credits for the purchase of certain machinery or equipment
9 purchased by a mining establishment. The act grants rulemaking authority to the State Tax
10 Commission. This act takes effect for taxable years beginning on or after January 1, 2002.
11 This act affects sections of Utah Code Annotated 1953 as follows:
12 ENACTS:
13 59-7-604.1, Utah Code Annotated 1953
14 59-10-133, Utah Code Annotated 1953
15 Be it enacted by the Legislature of the state of Utah:
16 Section 1. Section 59-7-604.1 is enacted to read:
17 59-7-604.1. Refundable credit for machinery or equipment purchased by a mining
18 establishment -- Definitions -- Rulemaking authority.
19 (1) As used in this section:
20 (a) "credit amount" is an amount equal to the product of:
21 (i) the state tax percentage provided for in Subsection 59-12-103 (2)(a)(i); and
22 (ii) the purchase price of the machinery or equipment;
23 (b) "machinery or equipment" means:
24 (i) machinery;

25 (ii) equipment; or
26 (iii) a part for:
27 (A) machinery; or
28 (B) equipment;
29 (c) "mining establishment" means an establishment described in Sector 21, Mining, of
30 NAICS;
31 (d) "NAICS" means the 1997 North American Industry Classification System of the
32 federal Executive Office of the President, Office of Management and Budget; and
33 (e) (i) "purchase price" means the amount a mining establishment pays for machinery or
34 equipment; and
35 (ii) "purchase price" does not include an amount of tax imposed on a purchase of
36 machinery or equipment.
37 (2) For taxable years beginning on or after January 1, 2002, and subject to Subsection (3),
38 a mining establishment may claim a refundable credit against the tax imposed by this chapter in
39 an amount equal to the credit amount for machinery or equipment:
40 (a) that the mining establishment purchases during the taxable year;
41 (b) for which the mining establishment paid a tax under Section 59-12-103 ;
42 (c) that is used in a mining process; and
43 (d) that has an economic life of three or more years.
44 (3) A mining establishment:
45 (a) may only claim the credit for the taxable year during which the mining establishment
46 purchased the machinery or equipment; and
47 (b) may not carry forward or carry back a credit authorized by this section.
48 (4) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
49 commission shall make rules defining the terms:
50 (a) "equipment";
51 (b) "establishment";
52 (c) "machinery"; and
53 (d) "mining process."
54 Section 2. Section 59-10-133 is enacted to read:
55 59-10-133. Refundable credit for machinery or equipment purchased by a mining

56 establishment -- Definitions -- Rulemaking authority.
57 (1) As used in this section:
58 (a) "credit amount" is an amount equal to the product of:
59 (i) the state tax percentage provided for in Subsection 59-12-103 (2)(a)(i); and
60 (ii) the purchase price of the machinery or equipment;
61 (b) "machinery or equipment" means:
62 (i) machinery;
63 (ii) equipment; or
64 (iii) a part for:
65 (A) machinery; or
66 (B) equipment;
67 (c) "mining establishment" means an establishment described in Sector 21, Mining, of
68 NAICS;
69 (d) "NAICS" means the 1997 North American Industry Classification System of the
70 federal Executive Office of the President, Office of Management and Budget; and
71 (e) (i) "purchase price" means the amount a mining establishment pays for machinery or
72 equipment; and
73 (ii) "purchase price" does not include an amount of tax imposed on a purchase of
74 machinery or equipment.
75 (2) For taxable years beginning on or after January 1, 2002, and subject to Subsection (3),
76 a mining establishment may claim a refundable credit against the tax imposed by this chapter in
77 an amount equal to the credit amount for machinery or equipment:
78 (a) that the mining establishment purchases during the taxable year;
79 (b) for which the mining establishment paid a tax under Section 59-12-103 ;
80 (c) that is used in a mining process; and
81 (d) that has an economic life of three or more years.
82 (3) A mining establishment:
83 (a) may only claim the credit for the taxable year during which the mining establishment
84 purchased the machinery or equipment; and
85 (b) may not carry forward or carry back a credit authorized by this section.
86 (4) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the

87 commission shall make rules defining the terms:
88 (a) "equipment";
89 (b) "establishment";
90 (c) "machinery"; and
91 (d) "mining process."
92 Section 3. Effective date.
93 This act takes effect for taxable years beginning on or after January 1, 2002.