S.B. 36 Enrolled

INCOME TAX - ENERGY SAVINGS TAX
CREDIT EXTENSION
1997 GENERAL SESSION
STATE OF UTAH
Sponsor: R. Mont Evans
AN ACT RELATING TO REVENUE AND TAXATION; REAUTHORIZING THE INCOME
TAX CREDIT FOR ENERGY SAVING SYSTEMS COSTS; MODIFYING THE
MAXIMUM AMOUNTS ALLOWABLE AS CREDITS FOR RESIDENTIAL AND
COMMERCIAL ENERGY SYSTEMS; MOVING THE CORPORATE TAX CREDIT
AUTHORIZED UNDER THE INDIVIDUAL INCOME TAX ACT INTO TITLE 59,
CHAPTER 7, CORPORATE FRANCHISE AND INCOME TAXES; MOVING
CERTIFICATION DUTIES FROM THE OFFICE OF ENERGY SERVICES TO THE
OFFICE OF ENERGY AND RESOURCE PLANNING; MODIFYING CERTAIN
DEFINITIONS; MAKING TECHNICAL CHANGES; PROVIDING FOR
RETROSPECTIVE OPERATION; AND PROVIDING A REPEAL DATE.
This act affects sections of Utah Code Annotated 1953 as follows:
AMENDS:
59-10-601, as last amended by Chapter 12, Laws of Utah 1994
59-10-602, as last amended by Chapter 3, Laws of Utah 1991, First Special Session
59-10-603, as last amended by Chapter 4, Laws of Utah 1993
59-10-604, as last amended by Chapter 169, Laws of Utah 1988
ENACTS:
59-7-611, Utah Code Annotated 1953
63-55b-5901, Utah Code Annotated 1953
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 59-7-611 is enacted to read:
59-7-611. Energy saving systems tax credit -- Limitations -- Definitions -- Tax credit
in addition to other credits -- Certification -- Rulemaking authority -- Reimbursement of
Uniform School Fund.

(1) As used in this section:
(a) "Active solar system":
(i) means a system of equipment capable of collecting and converting incident solar radiation
into thermal, mechanical, or electrical energy, and transferring these forms of energy by a separate
apparatus to storage or to the point of use; and
(ii) includes water heating, space heating or cooling, and electrical or mechanical energy
generation.
(b) "Biomass system" means any system of apparatus and equipment capable of converting
organic plant, wood, or waste products into electrical and thermal energy and transferring these
forms of energy by a separate apparatus to the point of use or storage.
(c) "Business entity" means any sole proprietorship, estate, trust, partnership, association,
corporation, cooperative, or other entity under which business is conducted or transacted.
(d) "Commercial energy system" means any active solar, passive solar, wind, hydroenergy,
or biomass system used to supply energy to a commercial unit or as a commercial enterprise.
(e) "Commercial enterprise" means a business entity whose purpose is to produce electrical,
mechanical, or thermal energy for sale from a commercial energy system.
(f) (i) "Commercial unit" means any building or structure which a business entity uses to
transact its business except as provided in Subsection (1)(f)(ii); and
(ii) (A) in the case of an active solar system used for agricultural water pumping or a wind
system, each individual energy generating device shall be a commercial unit; and
(B) if an energy system is the building or structure which a business entity uses to transact
its business, a commercial unit is the complete energy system itself.
(g) "Office of Energy and Resource Planning" means the Office of Energy and Resource
Planning, Department of Natural Resources.
(h) "Hydroenergy system" means a system of apparatus and equipment capable of
intercepting and converting kinetic water energy into electrical or mechanical energy and transferring
this form of energy by separate apparatus to the point of use or storage.
(i) "Individual taxpayer" means any person who is a taxpayer as defined in Section

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59-10-103 and a resident individual as defined in Section 59-10-103.
(j) "Passive solar system":
(i) means a direct thermal system which utilizes the structure of a building and its operable
components to provide for collection, storage, and distribution of heating or cooling during the
appropriate times of the year by utilizing the climate resources available at the site; and
(ii) includes those portions and components of a building that are expressly designed and
required for the collection, storage, and distribution of solar energy.
(k) "Residential energy system" means any active solar, passive solar, wind, or hydroenergy
system used to supply energy to or for any residential unit.
(l) "Residential unit" means any house, condominium, apartment, or similar dwelling unit
which serves as a dwelling for a person, group of persons, or a family but does not include property
subject to the fees in lieu of the ad valorem tax under Sections 59-2-404 through 59-2-405.
(m) "Wind system" means a system of apparatus and equipment capable of intercepting and
converting wind energy into mechanical or electrical energy and transferring these forms of energy
by a separate apparatus to the point of use or storage.
(2) (a) (i) A business entity that purchases and completes or participates in the financing of
a residential energy system to supply all or part of the energy required for a residential unit owned
or used by the business entity and situated in Utah is entitled to a tax credit as provided in this
Subsection (2)(a).
(ii) (A) A business entity is entitled to a tax credit equal to 25% of the costs of a residential
energy system installed with respect to each residential unit it owns or uses, including installation
costs, against any tax due under this chapter for the taxable year in which the energy system is
completed and placed in service.
(B) The total amount of the credit under this Subsection (2)(a) may not exceed $2,000 per
residential unit.
(C) The credit under this Subsection (2)(a) is allowed for any residential energy system
completed and placed in service on or after January 1, 1997, but prior to January 1, 2001.
(iii) If a business entity sells a residential unit to an individual taxpayer prior to making a

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claim for the tax credit under this Subsection (2)(a), the business entity may:
(A) assign its right to this tax credit to the individual taxpayer; and
(B) if the business entity assigns its right to the tax credit to an individual taxpayer under
Subsection (2)(a)(iii)(A), the individual taxpayer may claim the tax credit as if the individual
taxpayer had completed or participated in the costs of the residential energy system under Section
59-10-602.
(b) (i) A business entity that purchases or participates in the financing of a commercial
energy system is entitled to a tax credit as provided in this Subsection (2)(b) if:
(A) the commercial energy system supplies all or part of the energy required by commercial
units owned or used by the business entity; or
(B) the business entity sells all or part of the energy produced by the commercial energy
system as a commercial enterprise.
(ii) (A) A business entity is entitled to a tax credit equal to 10% of the costs of any
commercial energy system installed, including installation costs, against any tax due under this
chapter for the taxable year in which the commercial energy system is completed and placed in
service.
(B) The total amount of the credit under this Subsection (2)(b) may not exceed $50,000 per
commercial unit.
(C) The credit under this Subsection (2)(b) is allowed for any commercial energy system
completed and placed in service on or after January 1, 1997, but prior to January 1, 2001.
(iii) A business entity that leases a commercial energy system installed on a commercial unit
is eligible for the tax credit under this Subsection (2)(b) if the lessee can confirm that the lessor
irrevocably elects not to claim the credit.
(iv) Only the principal recovery portion of the lease payments, which is the cost incurred by
a business entity in acquiring a commercial energy system, excluding interest charges and
maintenance expenses, is eligible for the tax credit under this Subsection (2)(b).
(v) A business entity that leases a commercial energy system is eligible to use the tax credit
under this Subsection (2)(b) for a period no greater than seven years from the initiation of the lease.

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(c) (i) A tax credit under this section may be claimed for the taxable year in which the energy
system is completed and placed in service.
(ii) Additional energy systems or parts of energy systems may be claimed for subsequent
years.
(iii) If the amount of a tax credit under this section exceeds a business entity's tax liability
under this chapter for a taxable year, the amount of the credit exceeding the liability may be carried
over for a period which does not exceed the next four taxable years.
(3) (a) The tax credits provided for under Subsection (2) are in addition to any tax credits
provided under the laws or rules and regulations of the United States.
(b) (i) The Office of Energy and Resource Planning may promulgate standards for residential
and commercial energy systems that cover the safety, reliability, efficiency, leasing, and technical
feasibility of the systems to ensure that the systems eligible for the tax credit use the state's
renewable and nonrenewable energy resources in an appropriate and economic manner.
(ii) A tax credit may not be taken under Subsection (2) until the Office of Energy and
Resource Planning has certified that the energy system has been completely installed and is a viable
system for saving or production of energy from renewable resources.
(c) The Office of Energy and Resource Planning and the commission are authorized to
promulgate rules in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
which are necessary to implement this section.
(d) The Uniform School Fund shall be reimbursed by transfers from the General Fund for
any credits taken under this section.
Section 2. Section 59-10-601 is amended to read:
59-10-601. Definitions.
As used in this part:
(1) "Active solar system":
(a) means a system of equipment capable of collecting and converting incident solar
radiation into thermal, mechanical, or electrical energy, and transferring these forms of energy by
a separate apparatus to storage or to the point of use[. It]; and

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(b) includes water heating, space heating or cooling, and electrical or mechanical energy
generation.
(2) "Biomass system" means any system of apparatus and equipment capable of converting
organic plant, wood, or waste products into electrical and thermal energy and transferring these
forms of energy by a separate apparatus to the point of use or storage.
(3) "Business entity" means any sole proprietorship, estate, trust, partnership, association,
corporation, cooperative, or other entity under which business is conducted or transacted.
(4) "Commercial energy system" means any active solar, passive solar, wind, hydroenergy,
or biomass system used to supply energy to a commercial unit or as a commercial enterprise.
(5) "Commercial enterprise" means a business entity whose purpose is to produce electrical,
mechanical, or thermal energy for sale from a commercial energy system.
(6) (a) "Commercial unit" means any building or structure which a business entity uses to
transact its business, except as provided in Subsection (6)(b); and
(b) (i) in the case of an active solar system used for agricultural water pumping or a wind
[energy] system [where], each individual [wind-generating] energy generating device shall be a
commercial unit[. When]; and
(ii) if an energy system is the building or structure which a business entity uses to transact
its business, a commercial unit is the complete energy system itself.
(7) "[Energy office] Office of Energy and Resource Planning" means the Office of Energy
[Services] and Resource Planning, Department of Natural Resources.
(8) "Hydroenergy system" means a system of apparatus and equipment capable of
intercepting and converting kinetic water energy into electrical or mechanical energy and transferring
this form of energy by separate apparatus to the point of use or storage.
(9) "Individual taxpayer" means any person who is a taxpayer as defined in Section
59-10-103 and a resident individual as defined in Section 59-10-103.
(10) "Passive solar system":
(a) means a direct thermal system which utilizes the structure of a building and its operable
components to provide for collection, storage, and distribution of heating or cooling during the

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appropriate times of the year by utilizing the climate resources available at the site[. It]; and
(b) includes those portions and components of a building that are expressly designed and
required for the collection, storage, and distribution of solar energy.
(11) "Residential energy system" means any active solar, passive solar, wind, or
hydroenergy system used to supply energy to or for any residential unit.
(12) "Residential unit" means any house, condominium, apartment, or [other] similar
dwelling unit which serves as a [principal] dwelling for a person, group of persons, or a family but
does not include property subject to the fees in lieu of the ad valorem tax under Sections 59-2-404
through 59-2-405.
(13) "Wind system" means a system of apparatus and equipment capable of intercepting and
converting wind energy into mechanical or electrical energy and transferring these forms of energy
by a separate apparatus to the point of use or storage.
Section 3. Section 59-10-602 is amended to read:
59-10-602. Individual tax credit -- Limitations.
(1) Any individual taxpayer [who purchases and completes or participates in the financing
of a residential energy system to supply all or part of the energy for the individual taxpayer's
residential unit in Utah is entitled to] may claim a tax credit as provided in this section[.] if:
(a) the individual taxpayer purchases and completes or participates in the financing of a
residential energy system to supply all or part of the energy for the individual taxpayer's residential
unit in the state; or
(b) (i) a business entity sells a residential unit to an individual taxpayer prior to making a
claim for a tax credit under Section 59-7-611 or 59-10-603; and
(ii) the business entity assigns its right to the tax credit to the individual taxpayer as provided
in Subsection 59-7-611(2)(a)(iii) or Subsection 59-10-603(1)(c).
(2) (a) [Except as provided in this subsection, the] An individual taxpayer meeting the
requirements of Subsection (1) is entitled to a tax credit equal to 25% of the costs of the energy
system, including installation costs, against any income tax liability of the individual taxpayer under
[Title 59, Chapter 10,] this chapter for the taxable year in which the residential energy system is

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completed and placed in service.
(b) The total amount of the credit under this section may not exceed [$1,500] $2,000 per
residential unit. [This]
(c) The credit under this section is allowed for any residential energy system completed and
placed in service on or after January 1, [1986] 1997, but prior to [December 31, 1995. For any
energy system completed and placed in service prior to the 1986 taxable year, the claim regarding
it shall be filed not later than when returns are due for the 1985 taxable year. The credit for
residential energy systems completed and installed prior to July 1, 1985, is equal to 10% of the cost
of the system, including installation costs. The total amount of the credit for residential energy
systems completed and installed prior to July 1, 1985, may not exceed $1,000] January 1, 2001.
(3) (a) The tax credit provided for in this section shall be claimed in the return for the taxable
year in which the energy system is completed and placed in service[, except as otherwise provided
in Subsection (2)].
(b) Additional residential energy systems or parts of residential energy systems may be
similarly claimed in returns for subsequent taxable years as long as the total amount claimed does
not exceed [$1,500] $2,000 per residential unit.
(c) If the amount of the tax credit under this section exceeds the income tax liability of the
individual taxpayer for that taxable year, then the amount not used may be carried over for a period
which does not exceed the next four taxable years.
(4) (a) Individual taxpayers who lease a residential energy system installed on a residential
unit are eligible for the residential energy tax credits if the lessee can confirm that the lessor
irrevocably elects not to claim the state tax credit.
(b) Only the principal recovery portion of the lease payments, which is the cost incurred by
the taxpayer in acquiring the residential energy system excluding interest charges and maintenance
expenses, is eligible for the tax credits.
(c) Individual taxpayers who lease residential energy systems are eligible to use the tax
credits for a period no greater than seven years from the initiation of the lease.
Section 4. Section 59-10-603 is amended to read:

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59-10-603. Business tax credit -- Limitations.
(1) [Any] (a) A business entity [subject to the provisions of Title 59] that purchases and
completes or participates in the financing of a residential energy system to supply all or part of the
energy required for a residential unit owned or used by the business entity and situated in Utah is
entitled to a tax [credits] credit as provided in this [section] Subsection (1).
[(2) (a) Except as provided in this subsection, the] (b) (i) A business entity is entitled to a
tax credit equal to 25% of the costs of [the] a residential energy system installed with respect to each
residential unit it owns or uses, including installation costs, against any [income tax or franchise tax
liability of the business entity under Title 59] tax due under this chapter for the taxable year in which
the energy system is completed and placed in service.
(ii) The total amount of the credit under this Subsection (1) may not exceed $[1,500] $2,000
per residential unit. [This]
(iii) The credit under this Subsection (1) is allowed for any residential energy system
completed and placed in service on or after January 1, [1986] 1997, but prior to [December 31, 1995.
For any residential energy system completed and placed in service prior to the 1986 taxable year,
the claim regarding it shall be filed not later than when returns are due for the 1985 taxable year.
The credit for residential energy systems completed and installed prior to July 1, 1985, is equal to
10% of the cost of the system, including installation costs. The total amount of the credit for
residential energy systems completed and installed prior to July 1, 1985, may not exceed $1,000 per
residential unit] January 1, 2001.
[(b)] (c) If [the] a business entity sells a residential unit to an individual taxpayer prior to
making a claim for the tax credit [provided for in Subsection (2)(a)] under this Subsection (1), the
business entity may:
(i) assign its right to this tax credit to the individual taxpayer[. The]; and
(ii) if the business entity assigns its right to the tax credit to an individual taxpayer under
Subsection (1)(c)(i), the individual taxpayer [is then entitled to the amount of this] may claim the
tax credit as if the individual taxpayer had completed or participated in the costs of the residential
energy system under Section 59-10-602.

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[(3)] (2) (a) [Any] A business entity [subject to the provisions of Title 59] that purchases or
participates in the financing of a commercial energy system is entitled to [the] a tax [credits] credit
as provided in this [chapter] Subsection (2) if [it]:
(i) the commercial energy system supplies all or part of the energy required [to] by
commercial units owned or used by the business entity; or
(ii) the business entity sells all or part of the energy produced by the commercial energy
system as a commercial enterprise.
(b) [The] (i) A business entity is entitled to a tax credit equal to 10% of the costs of any
commercial energy system installed, including installation costs, against any [income tax or
franchise tax liability of the business entity under Title 59] tax due under this chapter for the taxable
year in which the commercial energy system is completed and placed in service.
(ii) The total amount of the [credits] credit under this Subsection (2) may not exceed
[$25,000] $50,000 per commercial unit. [This]
(iii) The credit under this Subsection (2) is allowed for any commercial energy system
completed and placed in service on or after January 1, [1986] 1997, but prior to [December 31, 1995.
For any commercial energy system completed and placed in service prior to the 1986 taxable year,
the claim regarding it shall be filed no later than when returns are due for the 1985 taxable year. The
credit for any commercial energy system completed and placed in service prior to July 1, 1985, is
equal to 10% of the costs of the commercial energy system installed on each of the business entity's
commercial units only, including installation costs. The total amount of the credit for any
commercial energy system completed and placed in service prior to July 1, 1985, may not exceed
$3,000 per commercial unit] January 1, 2001.
[(4) (a) Business entities who lease] (c) A business entity that leases a commercial energy
system installed on a commercial unit [are] is eligible for the [commercial energy] tax [credits
described in this part] credit under this Subsection (2) if the lessee can confirm that the lessor
irrevocably elects not to claim the [state tax credits] credit.
[(b)] (d) Only the principal recovery portion of the lease payments, which is the cost incurred
by [the taxpayer] a business entity in acquiring [the] a commercial energy system, excluding interest

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charges and maintenance expenses, is eligible for the tax [credits] credit under this Subsection (2).
[(c) Business entities who lease] (e) A business entity that leases a commercial energy
[systems are] system is eligible to use the tax [credits] credit under this Subsection (2) for a period
no greater than seven years from the initiation of the lease.
[(5) The] (3) (a) A tax [credits provided for in this section can] credit under this section may
be claimed [by either the business entity, or if assigned as provided in Subsection (2) (b), the
individual taxpayer, in the return] for the taxable year in which the energy system is completed and
placed in service [except as provided in Subsection (2)].
(b) Additional energy systems or parts of energy systems may be claimed [in returns] for
subsequent years [as long as the total amount claimed does not exceed the maximum credit allowed
for in Subsection (2)].
(c) If the amount of [the] a tax credit under this section exceeds [the income] a business
entity's tax liability [of the business entity] under this chapter for [that] a taxable year, [or individual
taxpayer if assigned as provided in Subsection (2)(b), then] the amount [not used as a] of the credit
exceeding the liability may be carried over for a period which does not exceed the next four taxable
years.
Section 5. Section 59-10-604 is amended to read:
59-10-604. Tax credit in addition to other credits -- Certification -- Rulemaking
authority -- Reimbursement of Uniform School Fund.
(1) The tax [credit] credits provided [in this part is] for under Sections 59-10-602 and
59-10-603 are in addition to any tax credits provided under the laws or rules and regulations of the
United States.
(2) (a) The [energy office] Office of Energy and Resource Planning may promulgate
standards for residential and commercial energy systems that cover the safety, reliability, efficiency,
leasing, and technical feasibility of the systems to ensure that the systems eligible for the tax credit
[provided in this part] use the state's renewable and nonrenewable energy resources in an appropriate
and economic manner. [No]
(b) A tax credit [can] may not be taken under [this part] Section 59-10-602 or 59-10-603

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until the [energy office] Office of Energy and Resource Planning has certified that the energy system
has been completely installed and is a viable system for saving or production of energy from
renewable resources.
(3) The [energy office] Office of Energy and Resource Planning and the commission are
authorized to promulgate rules in accordance with Title 63, Chapter 46a, [the] Utah Administrative
Rulemaking Act, which are necessary [for purposes of] to implement this part.
(4) The [amount of the credits allowed by this part is derived from the General] Uniform
School Fund [with appropriate] shall be reimbursed by transfers [made] from [it to reimburse] the
[Uniform School] General Fund [to effectuate this chapter] for any credits taken under this part.
Section 6. Section 63-55b-5901 is enacted to read:
63-55b-5901. Repeal Date -- Title 59.
Section 59-7-611 and Sections 59-10-601 through 59-10-604 are repealed January 1, 2001.
Section 7. Retrospective operation.
This act has retrospective operation for taxable years beginning on or after January 1, 1997.

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