First Substitute H.B. 74

Senator J. Stuart Adams proposes the following substitute bill:


             1     
ENERGY EFFICIENT VEHICLE TAX CREDITS

             2     
2014 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: V. Lowry Snow

             5     
Senate Sponsor: J. Stuart Adams

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill addresses tax credits related to energy efficient vehicles.
             10      Highlighted Provisions:
             11          This bill:
             12          .    addresses the amount of tax credit that may be claimed for the purchase of certain
             13      energy efficient vehicles; and
             14          .    makes technical and conforming changes.
             15      Money Appropriated in this Bill:
             16          None
             17      Other Special Clauses:
             18          This bill takes effect for a taxable year beginning on or after January 1, 2015.
             19      Utah Code Sections Affected:
             20      AMENDS:
             21           59-7-605 , as last amended by Laws of Utah 2013, Chapter 184
             22           59-10-1009 , as last amended by Laws of Utah 2013, Chapter 184
             23     
             24      Be it enacted by the Legislature of the state of Utah:
             25          Section 1. Section 59-7-605 is amended to read:


             26           59-7-605. Definitions -- Tax credits related to energy efficient vehicles.
             27          (1) As used in this section:
             28          (a) "Air quality standards" means that a vehicle's emissions are equal to or cleaner than
             29      the standards established in[: (i) bin 2 in Table S04-1, of 40 C.F.R. 86.1811-04(c)(6); or (ii)
             30      for a new qualified plug-in electric drive motor vehicle, as defined in Section 30D, Internal
             31      Revenue Code,] bin 4 in Table S04-1, of 40 C.F.R. 86.1811-04(c)(6).
             32          (b) "Board" means the Air Quality Board created under Title 19, Chapter 2, Air
             33      Conservation Act.
             34          (c) "Certified by the board" means that:
             35          (i) a motor vehicle on which conversion equipment has been installed meets the
             36      following criteria:
             37          (A) before the installation of conversion equipment, the vehicle does not exceed the
             38      emission cut points for a transient test driving cycle, as specified in 40 C.F.R. Part 51,
             39      Appendix E to Subpart S, or an equivalent test for the make, model, and year of the vehicle;
             40      and
             41          (B) as a result of the installation of conversion equipment on the motor vehicle, the
             42      motor vehicle has reduced emissions; or
             43          (ii) special mobile equipment on which conversion equipment has been installed has
             44      reduced emissions.
             45          (d) "Clean fuel grant" means a grant awarded under Title 19, Chapter 1, Part 4, Clean
             46      Fuels and Vehicle Technology Program Act, for reimbursement of a portion of the incremental
             47      cost of an OEM vehicle or the cost of conversion equipment.
             48          (e) "Conversion equipment" means equipment referred to in Subsection (2)(c) or (d).
             49          (f) "OEM vehicle" has the same meaning as in Section 19-1-402 .
             50          (g) "Original purchase" means the purchase of a vehicle that has never been titled or
             51      registered and has been driven less than 7,500 miles.
             52          (h) "Qualifying electric [or hybrid] vehicle" means a vehicle that:
             53          (i) meets air quality standards;
             54          (ii) is not fueled by natural gas;
             55          (iii) is fueled by[: (A)] electricity only; [or] and
             56          [(B) a combination of electricity and diesel fuel, gasoline, a mixture of gasoline and


             57      ethanol, or propane; and]
             58          (iv) is an OEM vehicle except that the vehicle is fueled by a fuel described in
             59      Subsection (1)(h)(iii).
             60          (i) "Qualifying plug-in hybrid vehicle" means a vehicle that:
             61          (i) meets air quality standards;
             62          (ii) is not fueled by natural gas or propane;
             63          (iii) has a battery capacity that meets or exceeds the battery capacity described in
             64      Section 30D(b)(3), Internal Revenue Code; and
             65          (iv) is fueled by a combination of electricity and:
             66          (A) diesel fuel;
             67          (B) gasoline; or
             68          (C) a mixture of gasoline and ethanol.
             69          [(i)] (j) "Reduced emissions" means:
             70          (i) for purposes of a motor vehicle on which conversion equipment has been installed,
             71      that the motor vehicle's emissions of regulated pollutants, when operating on a fuel listed in
             72      Subsection (2)(d)(i) or (ii), is less than the emissions were before the installation of the
             73      conversion equipment, as demonstrated by:
             74          (A) certification of the conversion equipment by the federal Environmental Protection
             75      Agency or by a state that has certification standards recognized by the board;
             76          (B) testing the motor vehicle, before and after installation of the conversion equipment,
             77      in accordance with 40 C.F.R. Part 86, Control of Emissions from New and In-use Highway
             78      Vehicles and Engines, using all fuel the motor vehicle is capable of using;
             79          (C) for a retrofit natural gas vehicle that is retrofit in accordance with Section
             80      19-1-406 , testing that as a result of the retrofit, the retrofit natural gas vehicle satisfies the
             81      emission standards applicable under Section 19-1-406 ; or
             82          (D) any other test or standard recognized by board rule, made in accordance with Title
             83      63G, Chapter 3, Utah Administrative Rulemaking Act; or
             84          (ii) for purposes of special mobile equipment on which conversion equipment has been
             85      installed, that the special mobile equipment's emissions of regulated pollutants, when operating
             86      on fuels listed in Subsection (2)(d)(i) or (ii), is less than the emissions were before the
             87      installation of conversion equipment, as demonstrated by:


             88          (A) certification of the conversion equipment by the federal Environmental Protection
             89      Agency or by a state that has certification standards recognized by the board; or
             90          (B) any other test or standard recognized by board rule, made in accordance with Title
             91      63G, Chapter 3, Utah Administrative Rulemaking Act.
             92          [(j)] (k) "Special mobile equipment":
             93          (i) means any mobile equipment or vehicle that is not designed or used primarily for
             94      the transportation of persons or property; and
             95          (ii) includes construction or maintenance equipment.
             96          (2) For the taxable year beginning on or after January 1, [2014] 2015, but beginning on
             97      or before December 31, [2014] 2015, a taxpayer may claim a tax credit against tax otherwise
             98      due under this chapter or Chapter 8, Gross Receipts Tax on Certain Corporations Not Required
             99      to Pay Corporate Franchise or Income Tax Act, in an amount equal to:
             100          (a) (i) [$605] for the original purchase of a new qualifying electric [or hybrid] vehicle
             101      that is registered in this state[;], the lesser of:
             102          (A) $1,500; or
             103          (B) 35% of the purchase price of the vehicle; or
             104          (ii) for the original purchase of a new qualifying plug-in hybrid vehicle that is
             105      registered in this state, $1,000;
             106          (b) for the original purchase of a new vehicle fueled by natural gas or propane that is
             107      registered in this state, the lesser of:
             108          (i) [$2,500] $1,500; or
             109          (ii) 35% of the purchase price of the vehicle;
             110          (c) 50% of the cost of equipment for conversion, if certified by the board, of a motor
             111      vehicle registered in this state minus the amount of any clean fuel grant received, up to a
             112      maximum tax credit of [$2,500] $1,500 per motor vehicle, if the motor vehicle is to:
             113          (i) be fueled by propane, natural gas, or electricity;
             114          (ii) be fueled by other fuel the board determines annually on or before July 1 to be at
             115      least as effective in reducing air pollution as fuels under Subsection (2)(c)(i); or
             116          (iii) meet the federal clean-fuel vehicle standards in the federal Clean Air Act
             117      Amendments of 1990, 42 U.S.C. Sec. 7521 et seq.; [and]
             118          (d) 50% of the cost of equipment for conversion, if certified by the board, of a special


             119      mobile equipment engine minus the amount of any clean fuel grant received, up to a maximum
             120      tax credit of $1,000 per special mobile equipment engine, if the special mobile equipment is to
             121      be fueled by:
             122          (i) propane, natural gas, or electricity; or
             123          (ii) other fuel the board determines annually on or before July 1 to be:
             124          (A) at least as effective in reducing air pollution as the fuels under Subsection (2)(d)(i);
             125      or
             126          (B) substantially more effective in reducing air pollution than the fuel for which the
             127      engine was originally designed[.]; and
             128          (e) for a lease of a vehicle described in Subsection (2)(a) or (b), an amount equal to the
             129      product of:
             130          (i) the amount of tax credit the taxpayer would otherwise qualify to claim under
             131      Subsection (2)(a) or (b) had the taxpayer purchased the vehicle, except that the purchase price
             132      described in Subsection (2)(a)(i)(B) or (2)(b)(ii) is considered to be the value of the vehicle at
             133      the beginning of the lease; and
             134          (ii) a percentage calculated by:
             135          (A) determining the difference between the value of the vehicle at the beginning of the
             136      lease, as stated in the lease agreement, and the value of the vehicle at the end of the lease, as
             137      stated in the lease agreement; and
             138          (B) dividing the difference determined under Subsection (2)(e)(ii)(A) by the value of
             139      the vehicle at the beginning of the lease, as stated in the lease agreement.
             140          (3) (a) The board shall:
             141          (i) determine the amount of tax credit a taxpayer is allowed under this section; and
             142          (ii) provide the taxpayer with a written certification of the amount of tax credit the
             143      taxpayer is allowed under this section.
             144          [(3)] (b) A taxpayer shall provide proof of the purchase or lease of an item for which a
             145      tax credit is allowed under this section by:
             146          [(a)] (i) providing proof to the board in the form the board requires by rule;
             147          [(b)] (ii) receiving a written statement from the board acknowledging receipt of the
             148      proof; and
             149          [(c)] (iii) retaining the written statement described in Subsection (3)(b)(ii).


             150          (c) A taxpayer shall retain the written certification described in Subsection (3)(a)(ii).
             151          (4) Except as provided by Subsection (5), the tax credit under this section is allowed
             152      only:
             153          (a) against a tax owed under this chapter or Chapter 8, Gross Receipts Tax on Certain
             154      Corporations Not Required to Pay Corporate Franchise or Income Tax Act, in the taxable year
             155      by the taxpayer;
             156          (b) for the taxable year in which [an item] a vehicle described in Subsection (2)(a) or
             157      (b) is purchased, a vehicle described in Subsection (2)(e) is leased, or conversion equipment
             158      described in Subsection (2)(c) or (d) is installed; and
             159          (c) once per vehicle.
             160          (5) A taxpayer may not assign a tax credit under this section to another person.
             161          [(5)] (6) If the amount of a tax credit claimed by a taxpayer under this section exceeds
             162      the taxpayer's tax liability under this chapter or Chapter 8, Gross Receipts Tax on Certain
             163      Corporations Not Required to Pay Corporate Franchise or Income Tax Act, for a taxable year,
             164      the amount of the tax credit exceeding the tax liability may be carried forward for a period that
             165      does not exceed the next five taxable years.
             166          [(6)] (7) In accordance with any rules prescribed by the commission under Subsection
             167      [(7)] (8), the commission shall transfer at least annually from the General Fund into the
             168      Education Fund the amount by which the amount of tax credit claimed under this section for a
             169      taxable year exceeds $500,000.
             170          [(7)] (8) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking
             171      Act, the commission may make rules for making a transfer from the General Fund into the
             172      Education Fund as required by Subsection [(6)] (7).
             173          Section 2. Section 59-10-1009 is amended to read:
             174           59-10-1009. Definitions -- Tax credits related to energy efficient vehicles.
             175          (1) As used in this section:
             176          (a) "Air quality standards" means that a vehicle's emissions are equal to or cleaner than
             177      the standards established in[: (i) bin 2 in Table S04-1, of 40 C.F.R. 86.1811-04(c)(6); or (ii)
             178      for a new qualified plug-in electric drive motor vehicle, as defined in Section 30D, Internal
             179      Revenue Code,] bin 4 in Table S04-1, of 40 C.F.R. 86.1811-04(c)(6).
             180          (b) "Board" means the Air Quality Board created in Title 19, Chapter 2, Air


             181      Conservation Act.
             182          (c) "Certified by the board" means that:
             183          (i) a motor vehicle on which conversion equipment has been installed meets the
             184      following criteria:
             185          (A) before the installation of conversion equipment, the vehicle does not exceed the
             186      emission cut points for a transient test driving cycle, as specified in 40 C.F.R. Part 51,
             187      Appendix E to Subpart S, or an equivalent test for the make, model, and year of the vehicle;
             188      and
             189          (B) as a result of the installation of conversion equipment on the motor vehicle, the
             190      motor vehicle has reduced emissions; or
             191          (ii) special mobile equipment on which conversion equipment has been installed has
             192      reduced emissions.
             193          (d) "Clean fuel grant" means a grant a claimant, estate, or trust receives under Title 19,
             194      Chapter 1, Part 4, Clean Fuels and Vehicle Technology Program Act, for reimbursement of a
             195      portion of the incremental cost of the OEM vehicle or the cost of conversion equipment.
             196          (e) "Conversion equipment" means equipment referred to in Subsection (2)(c) or (d).
             197          (f) "OEM vehicle" has the same meaning as in Section 19-1-402 .
             198          (g) "Original purchase" means the purchase of a vehicle that has never been titled or
             199      registered and has been driven less than 7,500 miles.
             200          (h) "Qualifying electric [or hybrid] vehicle" means a vehicle that:
             201          (i) meets air quality standards;
             202          (ii) is not fueled by natural gas;
             203          (iii) is fueled by[: (A)] electricity only; [or ] and
             204          [(B) a combination of electricity and diesel fuel, gasoline, a mixture of gasoline and
             205      ethanol, or propane; and]
             206          (iv) is an OEM vehicle except that the vehicle is fueled by a fuel described in
             207      Subsection (1)(h)(iii).
             208          (i) "Qualifying plug-in hybrid vehicle" means a vehicle that:
             209          (i) meets air quality standards;
             210          (ii) is not fueled by natural gas or propane;
             211          (iii) has a battery capacity that meets or exceeds the battery capacity described in


             212      Section 30D(b)(3), Internal Revenue Code; and
             213          (iv) is fueled by a combination of electricity and:
             214          (A) diesel fuel;
             215          (B) gasoline; or
             216          (C) a mixture of gasoline and ethanol.
             217          [(i)] (j) "Reduced emissions" means:
             218          (i) for purposes of a motor vehicle on which conversion equipment has been installed,
             219      that the motor vehicle's emissions of regulated pollutants, when operating on a fuel listed in
             220      Subsection (2)(d)(i) or (ii), is less than the emissions were before the installation of the
             221      conversion equipment, as demonstrated by:
             222          (A) certification of the conversion equipment by the federal Environmental Protection
             223      Agency or by a state that has certification standards recognized by the board;
             224          (B) testing the motor vehicle, before and after installation of the conversion equipment,
             225      in accordance with 40 C.F.R. Part 86, Control of Emissions from New and In-use Highway
             226      Vehicles and Engines, using all fuel the motor vehicle is capable of using;
             227          (C) for a retrofit natural gas vehicle that is retrofit in accordance with Section
             228      19-1-406 , testing that as a result of the retrofit, the retrofit natural gas vehicle satisfies the
             229      emission standards applicable under Section 19-1-406 ; or
             230          (D) any other test or standard recognized by board rule, made in accordance with Title
             231      63G, Chapter 3, Utah Administrative Rulemaking Act; or
             232          (ii) for purposes of special mobile equipment on which conversion equipment has been
             233      installed, that the special mobile equipment's emissions of regulated pollutants, when operating
             234      on fuels listed in Subsection (2)(d)(i) or (ii), is less than the emissions were before the
             235      installation of conversion equipment, as demonstrated by:
             236          (A) certification of the conversion equipment by the federal Environmental Protection
             237      Agency or by a state that has certification standards recognized by the board; or
             238          (B) any other test or standard recognized by board rule, made in accordance with Title
             239      63G, Chapter 3, Utah Administrative Rulemaking Act.
             240          [(j)] (k) "Special mobile equipment":
             241          (i) means any mobile equipment or vehicle not designed or used primarily for the
             242      transportation of persons or property; and


             243          (ii) includes construction or maintenance equipment.
             244          (2) For the taxable year beginning on or after January 1, [2014] 2015, but beginning on
             245      or before December 31, [2014] 2015, a claimant, estate, or trust may claim a nonrefundable tax
             246      credit against tax otherwise due under this chapter in an amount equal to:
             247          (a) (i) [$605] for the original purchase of a new qualifying electric [or hybrid] vehicle
             248      that is registered in this state[;], the lesser of:
             249          (A) $1,500; or
             250          (B) 35% of the purchase price of the vehicle; or
             251          (ii) for the original purchase of a new qualifying plug-in hybrid vehicle that is
             252      registered in this state, $1,000;
             253          (b) for the original purchase of a new vehicle fueled by natural gas or propane that is
             254      registered in this state, the lesser of:
             255          (i) [$2,500] $1,500; or
             256          (ii) 35% of the purchase price of the vehicle;
             257          (c) 50% of the cost of equipment for conversion, if certified by the board, of a motor
             258      vehicle registered in this state minus the amount of any clean fuel conversion grant received, up
             259      to a maximum tax credit of [$2,500] $1,500 per vehicle, if the motor vehicle:
             260          (i) is to be fueled by propane, natural gas, or electricity;
             261          (ii) is to be fueled by other fuel the board determines annually on or before July 1 to be
             262      at least as effective in reducing air pollution as fuels under Subsection (2)(c)(i); or
             263          (iii) will meet the federal clean fuel vehicle standards in the federal Clean Air Act
             264      Amendments of 1990, 42 U.S.C. Sec. 7521 et seq.; [and]
             265          (d) 50% of the cost of equipment for conversion, if certified by the board, of a special
             266      mobile equipment engine minus the amount of any clean fuel conversion grant received, up to a
             267      maximum tax credit of $1,000 per special mobile equipment engine, if the special mobile
             268      equipment is to be fueled by:
             269          (i) propane, natural gas, or electricity; or
             270          (ii) other fuel the board determines annually on or before July 1 to be:
             271          (A) at least as effective in reducing air pollution as the fuels under Subsection (2)(d)(i);
             272      or
             273          (B) substantially more effective in reducing air pollution than the fuel for which the


             274      engine was originally designed[.]; and
             275          (e) for a lease of a vehicle described in Subsection (2)(a) or (b), an amount equal to the
             276      product of:
             277          (i) the amount of tax credit the claimant, estate, or trust would otherwise qualify to
             278      claim under Subsection (2)(a) or (b) had the claimant, estate, or trust purchased the vehicle,
             279      except that the purchase price described in Subsection (2)(a)(i)(B) or (2)(b)(ii) is considered to
             280      be the value of the vehicle at the beginning of the lease; and
             281          (ii) a percentage calculated by:
             282          (A) determining the difference between the value of the vehicle at the beginning of the
             283      lease, as stated in the lease agreement, and the value of the vehicle at the end of the lease, as
             284      stated in the lease agreement; and
             285          (B) dividing the difference determined under Subsection (2)(e)(ii)(A) by the value of
             286      the vehicle at the beginning of the lease, as stated in the lease agreement.
             287          (3) (a) The board shall:
             288          (i) determine the amount of tax credit a claimant, estate, or trust is allowed under this
             289      section; and
             290          (ii) provide the claimant, estate, or trust with a written certification of the amount of
             291      tax credit the claimant, estate, or trust is allowed under this section.
             292          [(3)] (b) A claimant, estate, or trust shall provide proof of the purchase or lease of an
             293      item for which a tax credit is allowed under this section by:
             294          [(a)] (i) providing proof to the board in the form the board requires by rule;
             295          [(b)] (ii) receiving a written statement from the board acknowledging receipt of the
             296      proof; and
             297          [(c)] (iii) retaining the written statement described in Subsection (3)(b)(ii).
             298          (c) A claimant, estate, or trust shall retain the written certification described in
             299      Subsection (3)(a)(ii).
             300          (4) Except as provided by Subsection (5), the tax credit under this section is allowed
             301      only:
             302          (a) against a tax owed under this chapter in the taxable year by the claimant, estate, or
             303      trust;
             304          (b) for the taxable year in which [an item] a vehicle described in Subsection (2)(a) or


             305      (b) is purchased, a vehicle described in Subsection (2)(e) is leased, or conversion equipment
             306      described in Subsection (2)(c) or (d) is installed; and
             307          (c) once per vehicle.
             308          (5) A claimant, estate, or trust may not assign a tax credit under this section to another
             309      person.
             310          [(5)] (6) If the amount of a tax credit claimed by a claimant, estate, or trust under this
             311      section exceeds the claimant's, estate's, or trust's tax liability under this chapter for a taxable
             312      year, the amount of the tax credit exceeding the tax liability may be carried forward for a period
             313      that does not exceed the next five taxable years.
             314          [(6)] (7) In accordance with any rules prescribed by the commission under Subsection
             315      [(7)] (8), the commission shall transfer at least annually from the General Fund into the
             316      Education Fund the amount by which the amount of tax credit claimed under this section for a
             317      taxable year exceeds $500,000.
             318          [(7)] (8) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking
             319      Act, the commission may make rules for making a transfer from the General Fund into the
             320      Education Fund as required by Subsection [(6)] (7).
             321          Section 3. Effective date.
             322          This bill takes effect for a taxable year beginning on or after January 1, 2015.


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