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H.B. 96 Enrolled

             1     

CLEANER BURNING FUELS TAX CREDITS AMENDMENTS

             2     
AND RELATED FUNDING

             3     
2013 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Chief Sponsor: Jack R. Draxler

             6     
Senate Sponsor: Kevin T. Van Tassell

             7     
             8      LONG TITLE
             9      General Description:
             10          This bill amends corporate and individual income tax credits for cleaner burning fuels
             11      and provides for transfers from the General Fund into the Education Fund in the amount
             12      by which the tax credit claimed exceeds $500,000.
             13      Highlighted Provisions:
             14          This bill:
             15          .    defines terms;
             16          .    modifies eligibility requirements to claim tax credits for cleaner burning fuels;
             17          .    extends corporate and individual income tax credits for cleaner burning fuels until
             18      the end of taxable year 2014;
             19          .    requires transfers from the General Fund into the Education Fund in the amount by
             20      which the tax credit claimed exceeds $500,000;
             21          .    grants rulemaking authority to the State Tax Commission; and
             22          .    makes technical and conforming changes.
             23      Money Appropriated in this Bill:
             24          None
             25      Other Special Clauses:
             26          This bill takes effect for a taxable year beginning on or after January 1, 2014.
             27      Utah Code Sections Affected:
             28      AMENDS:
             29          59-7-605, as last amended by Laws of Utah 2011, Chapter 358


             30          59-10-1009, as last amended by Laws of Utah 2011, Chapter 358
             31     
             32      Be it enacted by the Legislature of the state of Utah:
             33          Section 1. Section 59-7-605 is amended to read:
             34           59-7-605. Definitions -- Cleaner burning fuels tax credit.
             35          (1) As used in this section:
             36          (a) "Air quality standards" means that a vehicle's emissions are equal to or cleaner than
             37      the standards established in:
             38          (i) bin 2 in Table S04-1, of 40 C.F.R. 86.1811-04(c)(6); or
             39          (ii) for a new qualified plug-in electric drive motor vehicle, as defined in Section 30D,
             40      Internal Revenue Code, bin 4 in Table S04-1, of 40 C.F.R. 86.1811-04(c)(6).
             41          (b) "Board" means the Air Quality Board created under Title 19, Chapter 2, Air
             42      Conservation Act.
             43          (c) "Certified by the board" means that:
             44          (i) a motor vehicle on which conversion equipment has been installed meets the
             45      following criteria:
             46          (A) before the installation of conversion equipment, the vehicle does not exceed the
             47      emission cut points for a transient test driving cycle, as specified in 40 C.F.R. Part 51,
             48      Appendix E to Subpart S, or an equivalent test for the make, model, and year of the vehicle;
             49      and
             50          [(B) the motor vehicle's emissions of regulated pollutants, when operating on a fuel
             51      listed in Subsection (2)(c)(i) or (ii), is less than the emissions were before the installation of
             52      conversion equipment; and]
             53          [(C) a reduction in emissions under Subsection (1)(c)(i)(B) is demonstrated by:]
             54          [(I) certification of the conversion equipment by the federal Environmental Protection
             55      Agency or by a state whose certification standards are recognized by the board;]
             56          [(II) testing the motor vehicle, before and after installation of the conversion
             57      equipment, in accordance with 40 C.F.R. Part 86, Control of Emissions from New and In-use


             58      Highway Vehicles and Engines, using all fuel the motor vehicle is capable of using; or]
             59          [(III) any other test or standard recognized by board rule, which may not include a
             60      retrofit compressed natural gas vehicle that is retrofit in accordance with Section 19-1-406 ,
             61      unless that motor vehicle also satisfies Subsection (1)(c)(i)(C)(I); or]
             62          (B) as a result of the installation of conversion equipment on the motor vehicle, the
             63      motor vehicle has reduced emissions; or
             64          (ii) special mobile equipment on which conversion equipment has been installed
             65      [meets the following criteria:] has reduced emissions.
             66          [(A) the special mobile equipment's emissions of regulated pollutants, when operating
             67      on fuels listed in Subsection (2)(d)(i) or (ii), is less than the emissions were before the
             68      installation of conversion equipment; and]
             69          [(B) a reduction in emissions under Subsection (1)(c)(ii)(A) is demonstrated by:]
             70          [(I) certification of the conversion equipment by the federal Environmental Protection
             71      Agency or by a state whose certification standards are recognized by the board; or]
             72          [(II) any other test or standard recognized by board rule.]
             73          (d) "Clean fuel grant" means a grant awarded under Title 19, Chapter 1, Part 4, Clean
             74      Fuels and Vehicle Technology Program Act, for reimbursement of a portion of the incremental
             75      cost of an OEM vehicle or the cost of conversion equipment.
             76          (e) "Conversion equipment" means equipment referred to in Subsection (2)(c) or (d).
             77          [(f) "Fuel economy standards" means that a vehicle's combined fuel economy, as
             78      determined in 40 C.F.R. 600.209-95(d) is equal to or greater than:]
             79          [(i) 31 miles per gallon for gasoline-fueled vehicles;]
             80          [(ii) 36 miles per gallon for diesel-fueled vehicles;]
             81          [(iii) 19 miles per gallon for vehicles fueled by a blend of 85% ethanol and 15%
             82      gasoline;]
             83          [(iv) 19 miles per gallon for liquified petroleum gas-fueled vehicles; or]
             84          [(v) standards consistent with 40 C.F.R. 600.209-95(d) that are adopted by the Air
             85      Quality Board by rule.]


             86          [(g) "Incremental cost" has the same meaning as in Section 19-1-402 .]
             87          [(h)] (f) "OEM vehicle" has the same meaning as in Section 19-1-402 .
             88          [(i)] (g) "Original purchase" means the purchase of a vehicle that has never been titled
             89      or registered and has been driven less than 7,500 miles.
             90          (h) "Qualifying electric or hybrid vehicle" means a vehicle that:
             91          (i) meets air quality standards;
             92          (ii) is not fueled by natural gas;
             93          (iii) is fueled by:
             94          (A) electricity only; or
             95          (B) a combination of electricity and diesel fuel, gasoline, a mixture of gasoline and
             96      ethanol, or propane; and
             97          (iv) is an OEM vehicle except that the vehicle is fueled by a fuel described in
             98      Subsection (1)(h)(iii).
             99          (i) "Reduced emissions" means:
             100          (i) for purposes of a motor vehicle on which conversion equipment has been installed,
             101      that the motor vehicle's emissions of regulated pollutants, when operating on a fuel listed in
             102      Subsection (2)(d)(i) or (ii), is less than the emissions were before the installation of the
             103      conversion equipment, as demonstrated by:
             104          (A) certification of the conversion equipment by the federal Environmental Protection
             105      Agency or by a state that has certification standards recognized by the board;
             106          (B) testing the motor vehicle, before and after installation of the conversion equipment,
             107      in accordance with 40 C.F.R. Part 86, Control of Emissions from New and In-use Highway
             108      Vehicles and Engines, using all fuel the motor vehicle is capable of using;
             109          (C) for a retrofit natural gas vehicle that is retrofit in accordance with Section
             110      19-1-406 , testing that as a result of the retrofit, the retrofit natural gas vehicle satisfies the
             111      emission standards applicable under Section 19-1-406 ; or
             112          (D) any other test or standard recognized by board rule, made in accordance with Title
             113      63G, Chapter 3, Utah Administrative Rulemaking Act; or


             114          (ii) for purposes of special mobile equipment on which conversion equipment has been
             115      installed, that the special mobile equipment's emissions of regulated pollutants, when operating
             116      on fuels listed in Subsection (2)(d)(i) or (ii), is less than the emissions were before the
             117      installation of conversion equipment, as demonstrated by:
             118          (A) certification of the conversion equipment by the federal Environmental Protection
             119      Agency or by a state that has certification standards recognized by the board; or
             120          (B) any other test or standard recognized by board rule, made in accordance with Title
             121      63G, Chapter 3, Utah Administrative Rulemaking Act.
             122          (j) "Special mobile equipment":
             123          (i) means any mobile equipment or vehicle that is not designed or used primarily for
             124      the transportation of persons or property; and
             125          (ii) includes construction or maintenance equipment.
             126          (2) For the taxable [years] year beginning on or after January 1, [2009] 2014, but
             127      beginning on or before December 31, [2013] 2014, a taxpayer may claim a tax credit against
             128      tax otherwise due under this chapter or Chapter 8, Gross Receipts Tax on Certain Corporations
             129      Not Required to Pay Corporate Franchise or Income Tax Act, in an amount equal to:
             130          (a) $605 for the original purchase of a new qualifying electric or hybrid vehicle that is
             131      [not fueled by compressed natural gas if the vehicle is] registered in [Utah and meets air quality
             132      standards and fuel economy standards] this state;
             133          (b) for the purchase of a vehicle fueled by [compressed] natural gas that is registered in
             134      [Utah] this state, the lesser of:
             135          (i) $2,500; or
             136          (ii) 35% of the purchase price of the vehicle;
             137          (c) 50% of the cost of equipment for conversion, if certified by the board, of a motor
             138      vehicle registered in [Utah] this state minus the amount of any clean fuel grant received, up to a
             139      maximum tax credit of $2,500 per motor vehicle, if the motor vehicle is to:
             140          (i) be fueled by propane, natural gas, or electricity;
             141          (ii) be fueled by other fuel the board determines annually on or before July 1 to be at


             142      least as effective in reducing air pollution as fuels under Subsection (2)(c)(i); or
             143          (iii) meet the federal clean-fuel vehicle standards in the federal Clean Air Act
             144      Amendments of 1990, 42 U.S.C. Sec. 7521 et seq.; and
             145          (d) 50% of the cost of equipment for conversion, if certified by the board, of a special
             146      mobile equipment engine minus the amount of any clean fuel grant received, up to a maximum
             147      tax credit of $1,000 per special mobile equipment engine, if the special mobile equipment is to
             148      be fueled by:
             149          (i) propane, natural gas, or electricity; or
             150          (ii) other fuel the board determines annually on or before July 1 to be:
             151          (A) at least as effective in reducing air pollution as the fuels under Subsection (2)(d)(i);
             152      or
             153          (B) substantially more effective in reducing air pollution than the fuel for which the
             154      engine was originally designed.
             155          (3) A taxpayer shall provide proof of the purchase of an item for which a tax credit is
             156      allowed under this section by:
             157          (a) providing proof to the board in the form the board requires by rule;
             158          (b) receiving a written statement from the board acknowledging receipt of the proof;
             159      and
             160          (c) retaining the written statement described in Subsection (3)(b).
             161          (4) Except as provided by Subsection (5), the tax credit under this section is allowed
             162      only:
             163          (a) against [any Utah] a tax owed under this chapter or Chapter 8, Gross Receipts Tax
             164      on Certain Corporations Not Required to Pay Corporate Franchise or Income Tax Act, in the
             165      taxable year by the taxpayer;
             166          (b) [in] for the taxable year in which [the] an item [is purchased for which the tax
             167      credit is claimed] described in Subsection (2)(a) or (b) is purchased or conversion equipment
             168      described in Subsection (2)(c) or (d) is installed; and
             169          (c) once per vehicle.


             170          (5) If the amount of a tax credit claimed by a taxpayer under this section exceeds the
             171      taxpayer's tax liability under this chapter or Chapter 8, Gross Receipts Tax on Certain
             172      Corporations Not Required to Pay Corporate Franchise or Income Tax Act, for a taxable year,
             173      the amount of the tax credit exceeding the tax liability may be carried forward for a period that
             174      does not exceed the next five taxable years.
             175          [(6) The tax credit provided by this section may be taken only once per vehicle.]
             176          (6) In accordance with any rules prescribed by the commission under Subsection (7),
             177      the commission shall transfer at least annually from the General Fund into the Education Fund
             178      the amount by which the amount of tax credit claimed under this section for a taxable year
             179      exceeds $500,000.
             180          (7) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             181      commission may make rules for making a transfer from the General Fund into the Education
             182      Fund as required by Subsection (6).
             183          Section 2. Section 59-10-1009 is amended to read:
             184           59-10-1009. Definitions -- Cleaner burning fuels tax credit.
             185          (1) As used in this section:
             186          (a) "Air quality standards" means that a vehicle's emissions are equal to or cleaner than
             187      the standards established in:
             188          (i) bin 2 in Table S04-1, of 40 C.F.R. 86.1811-04(c)(6); or
             189          (ii) for a new qualified plug-in electric drive motor vehicle, as defined in Section 30D,
             190      Internal Revenue Code, bin 4 in Table S04-1, of 40 C.F.R. 86.1811-04(c)(6).
             191          (b) "Board" means the Air Quality Board created in Title 19, Chapter 2, Air
             192      Conservation Act.
             193          (c) "Certified by the board" means that:
             194          (i) a motor vehicle on which conversion equipment has been installed meets the
             195      following criteria:
             196          (A) before the installation of conversion equipment, the vehicle does not exceed the
             197      emission cut points for a transient test driving cycle, as specified in 40 C.F.R. Part 51,


             198      Appendix E to Subpart S, or an equivalent test for the make, model, and year of the vehicle;
             199      and
             200          [(B) the motor vehicle's emissions of regulated pollutants, when operating on fuels
             201      listed in Subsection (2)(c)(i) or (ii), is less than the emissions were before the installation of
             202      conversion equipment; and]
             203          [(C) a reduction in emissions under Subsection (1)(c)(i)(B) is demonstrated by:]
             204          [(I) certification of the conversion equipment by the federal Environmental Protection
             205      Agency or by a state whose certification standards are recognized by the board;]
             206          [(II) testing the motor vehicle, before and after installation of the conversion
             207      equipment, in accordance with 40 C.F.R. Part 86, Control Emissions from New and In-use
             208      Highway Vehicles and Engines, using all fuels the motor vehicle is capable of using; or]
             209          [(III) any other test or standard recognized by board rule, which may not include a
             210      retrofit compressed natural gas vehicle that is retrofit in accordance with Section 19-1-406 ,
             211      unless that motor vehicle also satisfies Subsection (1)(c)(i)(C)(I); or]
             212          (B) as a result of the installation of conversion equipment on the motor vehicle, the
             213      motor vehicle has reduced emissions; or
             214          (ii) special mobile equipment on which conversion equipment has been installed
             215      [meets the following criteria:] has reduced emissions.
             216          [(A) the special mobile equipment's emissions of regulated pollutants, when operating
             217      on fuels listed in Subsection (2)(c)(i) or (ii), is less than the emissions were before the
             218      installation of conversion equipment; and]
             219          [(B) a reduction in emissions under Subsection (1)(c)(ii)(A) is demonstrated by:]
             220          [(I) certification of the conversion equipment by the federal Environmental Protection
             221      Agency or by a state whose certification standards are recognized by the board; or]
             222          [(II) any other test or standard recognized by the board.]
             223          (d) "Clean fuel grant" means a grant a claimant, estate, or trust receives under Title 19,
             224      Chapter 1, Part 4, Clean Fuels and Vehicle Technology Program Act, for reimbursement of a
             225      portion of the incremental cost of the OEM vehicle or the cost of conversion equipment.


             226          (e) "Conversion equipment" means equipment referred to in Subsection (2)(c) or (d).
             227          [(f) "Fuel economy standards" means that a vehicle's combined fuel economy, as
             228      determined in 40 C.F.R. 600.209-95(d) is equal to or greater than:]
             229          [(i) 31 miles per gallon for gasoline-fueled vehicles;]
             230          [(ii) 36 miles per gallon for diesel-fueled vehicles;]
             231          [(iii) 19 miles per gallon for vehicles fueled by a blend of 85% ethanol and 15%
             232      gasoline;]
             233          [(iv) 19 miles per gallon for liquified petroleum gas-fueled vehicles; or]
             234          [(v) standards consistent with 40 C.F.R. 600.209-95(d) that are adopted by the Air
             235      Quality Board by rule.]
             236          [(g) "Incremental cost" has the same meaning as in Section 19-1-402 .]
             237          [(h)] (f) "OEM vehicle" has the same meaning as in Section 19-1-402 .
             238          [(i)] (g) "Original purchase" means the purchase of a vehicle that has never been titled
             239      or registered and has been driven less than 7,500 miles.
             240          (h) "Qualifying electric or hybrid vehicle" means a vehicle that:
             241          (i) meets air quality standards;
             242          (ii) is not fueled by natural gas;
             243          (iii) is fueled by:
             244          (A) electricity only; or
             245          (B) a combination of electricity and diesel fuel, gasoline, a mixture of gasoline and
             246      ethanol, or propane; and
             247          (iv) is an OEM vehicle except that the vehicle is fueled by a fuel described in
             248      Subsection (1)(h)(iii).
             249          (i) "Reduced emissions" means:
             250          (i) for purposes of a motor vehicle on which conversion equipment has been installed,
             251      that the motor vehicle's emissions of regulated pollutants, when operating on a fuel listed in
             252      Subsection (2)(d)(i) or (ii), is less than the emissions were before the installation of the
             253      conversion equipment, as demonstrated by:


             254          (A) certification of the conversion equipment by the federal Environmental Protection
             255      Agency or by a state that has certification standards recognized by the board;
             256          (B) testing the motor vehicle, before and after installation of the conversion equipment,
             257      in accordance with 40 C.F.R. Part 86, Control of Emissions from New and In-use Highway
             258      Vehicles and Engines, using all fuel the motor vehicle is capable of using;
             259          (C) for a retrofit natural gas vehicle that is retrofit in accordance with Section
             260      19-1-406 , testing that as a result of the retrofit, the retrofit natural gas vehicle satisfies the
             261      emission standards applicable under Section 19-1-406 ; or
             262          (D) any other test or standard recognized by board rule, made in accordance with Title
             263      63G, Chapter 3, Utah Administrative Rulemaking Act; or
             264          (ii) for purposes of special mobile equipment on which conversion equipment has been
             265      installed, that the special mobile equipment's emissions of regulated pollutants, when operating
             266      on fuels listed in Subsection (2)(d)(i) or (ii), is less than the emissions were before the
             267      installation of conversion equipment, as demonstrated by:
             268          (A) certification of the conversion equipment by the federal Environmental Protection
             269      Agency or by a state that has certification standards recognized by the board; or
             270          (B) any other test or standard recognized by board rule, made in accordance with Title
             271      63G, Chapter 3, Utah Administrative Rulemaking Act.
             272          (j) "Special mobile equipment":
             273          (i) means any mobile equipment or vehicle not designed or used primarily for the
             274      transportation of persons or property; and
             275          (ii) includes construction or maintenance equipment.
             276          (2) For the taxable [years] year beginning on or after January 1, [2009] 2014, but
             277      beginning on or before December 31, [2013] 2014, a claimant, estate, or trust may claim a
             278      nonrefundable tax credit against tax otherwise due under this chapter in an amount equal to:
             279          (a) $605 for the original purchase of a new qualifying electric or hybrid vehicle that is
             280      [not fueled by compressed natural gas if the vehicle is] registered in [Utah and meets air quality
             281      standards and fuel economy standards] this state;


             282          (b) for the purchase of a vehicle fueled by [compressed] natural gas that is registered in
             283      [Utah] this state, the lesser of:
             284          (i) $2,500; or
             285          (ii) 35% of the purchase price of the vehicle;
             286          (c) 50% of the cost of equipment for conversion, if certified by the board, of a motor
             287      vehicle registered in [Utah] this state minus the amount of any clean fuel conversion grant
             288      received, up to a maximum tax credit of $2,500 per vehicle, if the motor vehicle:
             289          (i) is to be fueled by propane, natural gas, or electricity;
             290          (ii) is to be fueled by other fuel the board determines annually on or before July 1 to be
             291      at least as effective in reducing air pollution as fuels under Subsection (2)(c)(i); or
             292          (iii) will meet the federal clean fuel vehicle standards in the federal Clean Air Act
             293      Amendments of 1990, 42 U.S.C. Sec. 7521 et seq.; and
             294          (d) 50% of the cost of equipment for conversion, if certified by the board, of a special
             295      mobile equipment engine minus the amount of any clean fuel conversion grant received, up to a
             296      maximum tax credit of $1,000 per special mobile equipment engine, if the special mobile
             297      equipment is to be fueled by:
             298          (i) propane, natural gas, or electricity; or
             299          (ii) other fuel the board determines annually on or before July 1 to be:
             300          (A) at least as effective in reducing air pollution as the fuels under Subsection (2)(d)(i);
             301      or
             302          (B) substantially more effective in reducing air pollution than the fuel for which the
             303      engine was originally designed.
             304          (3) A claimant, estate, or trust shall provide proof of the purchase of an item for which
             305      a tax credit is allowed under this section by:
             306          (a) providing proof to the board in the form the board requires by rule;
             307          (b) receiving a written statement from the board acknowledging receipt of the proof;
             308      and
             309          (c) retaining the written statement described in Subsection (3)(b).


             310          (4) Except as provided by Subsection (5), the tax credit under this section is allowed
             311      only:
             312          (a) against [any Utah] a tax owed under this chapter in the taxable year by the claimant,
             313      estate, or trust;
             314          (b) [in] for the taxable year in which [the] an item [is purchased for which the tax
             315      credit is claimed] described in Subsection (2)(a) or (b) is purchased or conversion equipment
             316      described in Subsection (2)(c) or (d) is installed; and
             317          (c) once per vehicle.
             318          (5) If the amount of a tax credit claimed by a claimant, estate, or trust under this
             319      section exceeds the claimant's, estate's, or trust's tax liability under this chapter for a taxable
             320      year, the amount of the tax credit exceeding the tax liability may be carried forward for a period
             321      that does not exceed the next five taxable years.
             322          [(6) The tax credit provided by this section may be taken only once per vehicle.]
             323          (6) In accordance with any rules prescribed by the commission under Subsection (7),
             324      the commission shall transfer at least annually from the General Fund into the Education Fund
             325      the amount by which the amount of tax credit claimed under this section for a taxable year
             326      exceeds $500,000.
             327          (7) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             328      commission may make rules for making a transfer from the General Fund into the Education
             329      Fund as required by Subsection (6).
             330          Section 3. Effective date.
             331          This bill takes effect for a taxable year beginning on or after January 1, 2014.


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