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First Substitute H.B. 96

Representative Jack R. Draxler proposes the following substitute bill:


             1     
CLEANER BURNING FUELS TAX CREDITS AMENDMENTS

             2     
2013 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Jack R. Draxler

             5     
Senate Sponsor: Kevin T. Van Tassell

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill amends corporate and individual income tax credits for cleaner burning fuels.
             10      Highlighted Provisions:
             11          This bill:
             12          .    defines terms;
             13          .    modifies eligibility requirements to claim tax credits for cleaner burning fuels;
             14          .    extends corporate and individual income tax credits for cleaner burning fuels until
             15      the end of taxable year 2018; and
             16          .    makes technical and conforming changes.
             17      Money Appropriated in this Bill:
             18          None
             19      Other Special Clauses:
             20          This bill has retrospective operation for a taxable year beginning on or after January 1,
             21      2013.
             22      Utah Code Sections Affected:
             23      AMENDS:
             24          59-7-605, as last amended by Laws of Utah 2011, Chapter 358
             25          59-10-1009, as last amended by Laws of Utah 2011, Chapter 358


             26     
             27      Be it enacted by the Legislature of the state of Utah:
             28          Section 1. Section 59-7-605 is amended to read:
             29           59-7-605. Definitions -- Cleaner burning fuels tax credit.
             30          (1) As used in this section:
             31          (a) "Air quality standards" means that a vehicle's emissions are equal to or cleaner than
             32      the standards established in:
             33          (i) bin 2 in Table S04-1, of 40 C.F.R. 86.1811-04(c)(6); or
             34          (ii) for a new qualified plug-in electric drive motor vehicle, as defined in Section 30D,
             35      Internal Revenue Code, bin 4 in Table S04-1, of 40 C.F.R. 86.1811-04(c)(6).
             36          (b) "Board" means the Air Quality Board created under Title 19, Chapter 2, Air
             37      Conservation Act.
             38          (c) "Certified by the board" means that:
             39          (i) a motor vehicle on which conversion equipment has been installed meets the
             40      following criteria:
             41          (A) before the installation of conversion equipment, the vehicle does not exceed the
             42      emission cut points for a transient test driving cycle, as specified in 40 C.F.R. Part 51,
             43      Appendix E to Subpart S, or an equivalent test for the make, model, and year of the vehicle;
             44      and
             45          [(B) the motor vehicle's emissions of regulated pollutants, when operating on a fuel
             46      listed in Subsection (2)(c)(i) or (ii), is less than the emissions were before the installation of
             47      conversion equipment; and]
             48          [(C) a reduction in emissions under Subsection (1)(c)(i)(B) is demonstrated by:]
             49          [(I) certification of the conversion equipment by the federal Environmental Protection
             50      Agency or by a state whose certification standards are recognized by the board;]
             51          [(II) testing the motor vehicle, before and after installation of the conversion
             52      equipment, in accordance with 40 C.F.R. Part 86, Control of Emissions from New and In-use
             53      Highway Vehicles and Engines, using all fuel the motor vehicle is capable of using; or]
             54          [(III) any other test or standard recognized by board rule, which may not include a
             55      retrofit compressed natural gas vehicle that is retrofit in accordance with Section 19-1-406 ,
             56      unless that motor vehicle also satisfies Subsection (1)(c)(i)(C)(I); or]


             57          (B) as a result of the installation of conversion equipment on the motor vehicle, the
             58      motor vehicle has reduced emissions; or
             59          (ii) special mobile equipment on which conversion equipment has been installed
             60      [meets the following criteria:] has reduced emissions.
             61          [(A) the special mobile equipment's emissions of regulated pollutants, when operating
             62      on fuels listed in Subsection (2)(d)(i) or (ii), is less than the emissions were before the
             63      installation of conversion equipment; and]
             64          [(B) a reduction in emissions under Subsection (1)(c)(ii)(A) is demonstrated by:]
             65          [(I) certification of the conversion equipment by the federal Environmental Protection
             66      Agency or by a state whose certification standards are recognized by the board; or]
             67          [(II) any other test or standard recognized by board rule.]
             68          (d) "Clean fuel grant" means a grant awarded under Title 19, Chapter 1, Part 4, Clean
             69      Fuels and Vehicle Technology Program Act, for reimbursement of a portion of the incremental
             70      cost of an OEM vehicle or the cost of conversion equipment.
             71          (e) "Conversion equipment" means equipment referred to in Subsection (2)(c) or (d).
             72          [(f) "Fuel economy standards" means that a vehicle's combined fuel economy, as
             73      determined in 40 C.F.R. 600.209-95(d) is equal to or greater than:]
             74          [(i) 31 miles per gallon for gasoline-fueled vehicles;]
             75          [(ii) 36 miles per gallon for diesel-fueled vehicles;]
             76          [(iii) 19 miles per gallon for vehicles fueled by a blend of 85% ethanol and 15%
             77      gasoline;]
             78          [(iv) 19 miles per gallon for liquified petroleum gas-fueled vehicles; or]
             79          [(v) standards consistent with 40 C.F.R. 600.209-95(d) that are adopted by the Air
             80      Quality Board by rule.]
             81          [(g) "Incremental cost" has the same meaning as in Section 19-1-402 .]
             82          [(h)] (f) "OEM vehicle" has the same meaning as in Section 19-1-402 .
             83          [(i)] (g) "Original purchase" means the purchase of a vehicle that has never been titled
             84      or registered and has been driven less than 7,500 miles.
             85          (h) "Qualifying electric or hybrid vehicle" means a vehicle that:
             86          (i) meets air quality standards;
             87          (ii) is not fueled by natural gas;


             88          (iii) is fueled by:
             89          (A) electricity only; or
             90          (B) a combination of electricity and diesel fuel, gasoline, a mixture of gasoline and
             91      ethanol, or liquified petroleum gas; and
             92          (iv) is an OEM vehicle except that the vehicle is fueled by a fuel described in
             93      Subsection (1)(h)(iii.)
             94          (i) "Reduced emissions" means:
             95          (i) for purposes of a motor vehicle on which conversion equipment has been installed,
             96      that the motor vehicle's emissions of regulated pollutants, when operating on a fuel listed in
             97      Subsection (2)(d)(i) or (ii), is less than the emissions were before the installation of the
             98      conversion equipment, as demonstrated by:
             99          (A) certification of the conversion equipment by the federal Environmental Protection
             100      Agency or by a state that has certification standards recognized by the board;
             101          (B) testing the motor vehicle, before and after installation of the conversion equipment,
             102      in accordance with 40 C.F.R. Part 86, Control of Emissions from New and In-use Highway
             103      Vehicles and Engines, using all fuel the motor vehicle is capable of using;
             104          (C) for a retrofit natural gas vehicle that is retrofit in accordance with Section
             105      19-1-406 , testing that as a result of the retrofit, the retrofit natural gas vehicle satisfies the
             106      emission standards applicable under Section 19-1-406 ; or
             107          (D) any other test or standard recognized by board rule, made in accordance with Title
             108      63G, Chapter 3, Utah Administrative Rulemaking Act; or
             109          (ii) for purposes of special mobile equipment on which conversion equipment has been
             110      installed, that the special mobile equipment's emissions of regulated pollutants, when operating
             111      on fuels listed in Subsection (2)(d)(i) or (ii), is less than the emissions were before the
             112      installation of conversion equipment, as demonstrated by:
             113          (A) certification of the conversion equipment by the federal Environmental Protection
             114      Agency or by a state that has certification standards recognized by the board; or
             115          (B) any other test or standard recognized by board rule, made in accordance with Title
             116      63G, Chapter 3, Utah Administrative Rulemaking Act.
             117          (j) "Special mobile equipment":
             118          (i) means any mobile equipment or vehicle that is not designed or used primarily for


             119      the transportation of persons or property; and
             120          (ii) includes construction or maintenance equipment.
             121          (2) For taxable years beginning on or after January 1, [2009] 2013, but beginning on or
             122      before December 31, [2013] 2018, a taxpayer may claim a tax credit against tax otherwise due
             123      under this chapter or Chapter 8, Gross Receipts Tax on Certain Corporations Not Required to
             124      Pay Corporate Franchise or Income Tax Act, in an amount equal to:
             125          (a) $605 for the original purchase of a new qualifying electric or hybrid vehicle that is
             126      [not fueled by compressed natural gas if the vehicle is] registered in [Utah and meets air quality
             127      standards and fuel economy standards] this state;
             128          (b) for the purchase of a vehicle fueled by [compressed] natural gas that is registered in
             129      [Utah] this state, the lesser of:
             130          (i) $2,500; or
             131          (ii) 35% of the purchase price of the vehicle;
             132          (c) 50% of the cost of equipment for conversion, if certified by the board, of a motor
             133      vehicle registered in [Utah] this state minus the amount of any clean fuel grant received, up to a
             134      maximum tax credit of $2,500 per motor vehicle, if the motor vehicle is to:
             135          (i) be fueled by propane, natural gas, or electricity;
             136          (ii) be fueled by other fuel the board determines annually on or before July 1 to be at
             137      least as effective in reducing air pollution as fuels under Subsection (2)(c)(i); or
             138          (iii) meet the federal clean-fuel vehicle standards in the federal Clean Air Act
             139      Amendments of 1990, 42 U.S.C. Sec. 7521 et seq.; and
             140          (d) 50% of the cost of equipment for conversion, if certified by the board, of a special
             141      mobile equipment engine minus the amount of any clean fuel grant received, up to a maximum
             142      tax credit of $1,000 per special mobile equipment engine, if the special mobile equipment is to
             143      be fueled by:
             144          (i) propane, natural gas, or electricity; or
             145          (ii) other fuel the board determines annually on or before July 1 to be:
             146          (A) at least as effective in reducing air pollution as the fuels under Subsection (2)(d)(i);
             147      or
             148          (B) substantially more effective in reducing air pollution than the fuel for which the
             149      engine was originally designed.


             150          (3) A taxpayer shall provide proof of the purchase of an item for which a tax credit is
             151      allowed under this section by:
             152          (a) providing proof to the board in the form the board requires by rule;
             153          (b) receiving a written statement from the board acknowledging receipt of the proof;
             154      and
             155          (c) retaining the written statement described in Subsection (3)(b).
             156          (4) Except as provided by Subsection (5), the tax credit under this section is allowed
             157      only:
             158          (a) against [any Utah] a tax owed under this chapter or Chapter 8, Gross Receipts Tax
             159      on Certain Corporations Not Required to Pay Corporate Franchise or Income Tax Act, in the
             160      taxable year by the taxpayer;
             161          (b) [in] for the taxable year in which [the], or the next taxable year after which, an item
             162      [is purchased for which the tax credit is claimed] described in Subsection (2)(a) or (b) is
             163      purchased or conversion equipment described in Subsection (2)(c) or (d) is installed; and
             164          (c) once per vehicle.
             165          (5) If the amount of a tax credit claimed by a taxpayer under this section exceeds the
             166      taxpayer's tax liability under this chapter or Chapter 8, Gross Receipts Tax on Certain
             167      Corporations Not Required to Pay Corporate Franchise or Income Tax Act, for a taxable year,
             168      the amount of the tax credit exceeding the tax liability may be carried forward for a period that
             169      does not exceed the next five taxable years.
             170          [(6) The tax credit provided by this section may be taken only once per vehicle.]
             171          Section 2. Section 59-10-1009 is amended to read:
             172           59-10-1009. Definitions -- Cleaner burning fuels tax credit.
             173          (1) As used in this section:
             174          (a) "Air quality standards" means that a vehicle's emissions are equal to or cleaner than
             175      the standards established in:
             176          (i) bin 2 in Table S04-1, of 40 C.F.R. 86.1811-04(c)(6); or
             177          (ii) for a new qualified plug-in electric drive motor vehicle, as defined in Section 30D,
             178      Internal Revenue Code, bin 4 in Table S04-1, of 40 C.F.R. 86.1811-04(c)(6).
             179          (b) "Board" means the Air Quality Board created in Title 19, Chapter 2, Air
             180      Conservation Act.


             181          (c) "Certified by the board" means that:
             182          (i) a motor vehicle on which conversion equipment has been installed meets the
             183      following criteria:
             184          (A) before the installation of conversion equipment, the vehicle does not exceed the
             185      emission cut points for a transient test driving cycle, as specified in 40 C.F.R. Part 51,
             186      Appendix E to Subpart S, or an equivalent test for the make, model, and year of the vehicle;
             187      and
             188          [(B) the motor vehicle's emissions of regulated pollutants, when operating on fuels
             189      listed in Subsection (2)(c)(i) or (ii), is less than the emissions were before the installation of
             190      conversion equipment; and]
             191          [(C) a reduction in emissions under Subsection (1)(c)(i)(B) is demonstrated by:]
             192          [(I) certification of the conversion equipment by the federal Environmental Protection
             193      Agency or by a state whose certification standards are recognized by the board;]
             194          [(II) testing the motor vehicle, before and after installation of the conversion
             195      equipment, in accordance with 40 C.F.R. Part 86, Control Emissions from New and In-use
             196      Highway Vehicles and Engines, using all fuels the motor vehicle is capable of using; or]
             197          [(III) any other test or standard recognized by board rule, which may not include a
             198      retrofit compressed natural gas vehicle that is retrofit in accordance with Section 19-1-406 ,
             199      unless that motor vehicle also satisfies Subsection (1)(c)(i)(C)(I); or]
             200          (B) as a result of the installation of conversion equipment on the motor vehicle, the
             201      motor vehicle has reduced emissions; or
             202          (ii) special mobile equipment on which conversion equipment has been installed
             203      [meets the following criteria:] has reduced emissions.
             204          [(A) the special mobile equipment's emissions of regulated pollutants, when operating
             205      on fuels listed in Subsection (2)(c)(i) or (ii), is less than the emissions were before the
             206      installation of conversion equipment; and]
             207          [(B) a reduction in emissions under Subsection (1)(c)(ii)(A) is demonstrated by:]
             208          [(I) certification of the conversion equipment by the federal Environmental Protection
             209      Agency or by a state whose certification standards are recognized by the board; or]
             210          [(II) any other test or standard recognized by the board.]
             211          (d) "Clean fuel grant" means a grant a claimant, estate, or trust receives under Title 19,


             212      Chapter 1, Part 4, Clean Fuels and Vehicle Technology Program Act, for reimbursement of a
             213      portion of the incremental cost of the OEM vehicle or the cost of conversion equipment.
             214          (e) "Conversion equipment" means equipment referred to in Subsection (2)(c) or (d).
             215          [(f) "Fuel economy standards" means that a vehicle's combined fuel economy, as
             216      determined in 40 C.F.R. 600.209-95(d) is equal to or greater than:]
             217          [(i) 31 miles per gallon for gasoline-fueled vehicles;]
             218          [(ii) 36 miles per gallon for diesel-fueled vehicles;]
             219          [(iii) 19 miles per gallon for vehicles fueled by a blend of 85% ethanol and 15%
             220      gasoline;]
             221          [(iv) 19 miles per gallon for liquified petroleum gas-fueled vehicles; or]
             222          [(v) standards consistent with 40 C.F.R. 600.209-95(d) that are adopted by the Air
             223      Quality Board by rule.]
             224          [(g) "Incremental cost" has the same meaning as in Section 19-1-402 .]
             225          [(h)] (f) "OEM vehicle" has the same meaning as in Section 19-1-402 .
             226          [(i)] (g) "Original purchase" means the purchase of a vehicle that has never been titled
             227      or registered and has been driven less than 7,500 miles.
             228          (h) "Qualifying electric or hybrid vehicle" means a vehicle that:
             229          (i) meets air quality standards;
             230          (ii) is not fueled by natural gas; and
             231          (iii) is fueled by:
             232          (A) electricity only; or
             233          (B) a combination of electricity and diesel fuel, gasoline, a mixture of gasoline and
             234      ethanol, or liquified petroleum gas.
             235          (i) "Reduced emissions" means:
             236          (i) for purposes of a motor vehicle on which conversion equipment has been installed,
             237      that the motor vehicle's emissions of regulated pollutants, when operating on a fuel listed in
             238      Subsection (2)(d)(i) or (ii), is less than the emissions were before the installation of the
             239      conversion equipment, as demonstrated by:
             240          (A) certification of the conversion equipment by the federal Environmental Protection
             241      Agency or by a state that has certification standards recognized by the board;
             242          (B) testing the motor vehicle, before and after installation of the conversion equipment,


             243      in accordance with 40 C.F.R. Part 86, Control of Emissions from New and In-use Highway
             244      Vehicles and Engines, using all fuel the motor vehicle is capable of using;
             245          (C) for a retrofit natural gas vehicle that is retrofit in accordance with Section
             246      19-1-406 , testing that as a result of the retrofit, the retrofit natural gas vehicle satisfies the
             247      emission standards applicable under Section 19-1-406 ; or
             248          (D) any other test or standard recognized by board rule, made in accordance with Title
             249      63G, Chapter 3, Utah Administrative Rulemaking Act; or
             250          (ii) for purposes of special mobile equipment on which conversion equipment has been
             251      installed, that the special mobile equipment's emissions of regulated pollutants, when operating
             252      on fuels listed in Subsection (2)(d)(i) or (ii), is less than the emissions were before the
             253      installation of 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; or
             256          (B) any other test or standard recognized by board rule, made in accordance with Title
             257      63G, Chapter 3, Utah Administrative Rulemaking Act.
             258          (j) "Special mobile equipment":
             259          (i) means any mobile equipment or vehicle not designed or used primarily for the
             260      transportation of persons or property; and
             261          (ii) includes construction or maintenance equipment.
             262          (2) For taxable years beginning on or after January 1, [2009] 2013, but beginning on or
             263      before December 31, [2013] 2018, a claimant, estate, or trust may claim a nonrefundable tax
             264      credit against tax otherwise due under this chapter in an amount equal to:
             265          (a) $605 for the original purchase of a new qualifying electric or hybrid vehicle that is
             266      [not fueled by compressed natural gas if the vehicle is] registered in [Utah and meets air quality
             267      standards and fuel economy standards] this state;
             268          (b) for the purchase of a vehicle fueled by [compressed] natural gas that is registered in
             269      [Utah] this state, the lesser of:
             270          (i) $2,500; or
             271          (ii) 35% of the purchase price of the vehicle;
             272          (c) 50% of the cost of equipment for conversion, if certified by the board, of a motor
             273      vehicle registered in [Utah] this state minus the amount of any clean fuel conversion grant


             274      received, up to a maximum tax credit of $2,500 per vehicle, if the motor vehicle:
             275          (i) is to be fueled by propane, natural gas, or electricity;
             276          (ii) is to be fueled by other fuel the board determines annually on or before July 1 to be
             277      at least as effective in reducing air pollution as fuels under Subsection (2)(c)(i); or
             278          (iii) will meet the federal clean fuel vehicle standards in the federal Clean Air Act
             279      Amendments of 1990, 42 U.S.C. Sec. 7521 et seq.; and
             280          (d) 50% of the cost of equipment for conversion, if certified by the board, of a special
             281      mobile equipment engine minus the amount of any clean fuel conversion grant received, up to a
             282      maximum tax credit of $1,000 per special mobile equipment engine, if the special mobile
             283      equipment is to be fueled by:
             284          (i) propane, natural gas, or electricity; or
             285          (ii) other fuel the board determines annually on or before July 1 to be:
             286          (A) at least as effective in reducing air pollution as the fuels under Subsection (2)(d)(i);
             287      or
             288          (B) substantially more effective in reducing air pollution than the fuel for which the
             289      engine was originally designed.
             290          (3) A claimant, estate, or trust shall provide proof of the purchase of an item for which
             291      a tax credit is allowed under this section by:
             292          (a) providing proof to the board in the form the board requires by rule;
             293          (b) receiving a written statement from the board acknowledging receipt of the proof;
             294      and
             295          (c) retaining the written statement described in Subsection (3)(b).
             296          (4) Except as provided by Subsection (5), the tax credit under this section is allowed
             297      only:
             298          (a) against [any Utah] a tax owed under this chapter in the taxable year by the claimant,
             299      estate, or trust;
             300          (b) [in] for the taxable year in which [the], or the next taxable year after which, an item
             301      [is purchased for which the tax credit is claimed] described in Subsection (2)(a) or (b) is
             302      purchased or conversion equipment described in Subsection (2)(c) or (d) is installed; and
             303          (c) once per vehicle.
             304          (5) If the amount of a tax credit claimed by a claimant, estate, or trust under this


             305      section exceeds the claimant's, estate's, or trust's tax liability under this chapter for a taxable
             306      year, the amount of the tax credit exceeding the tax liability may be carried forward for a period
             307      that does not exceed the next five taxable years.
             308          [(6) The tax credit provided by this section may be taken only once per vehicle.]
             309          Section 3. Retrospective operation
             310          This bill has retrospective operation for a taxable year beginning on or after January 1,
             311      2013.


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