S.B. 215

1

LOW INCOME HOUSING TAX CREDIT
2 1997 GENERAL SESSION
3 STATE OF UTAH
4 Sponsor: R. Mont Evans
5 AN ACT RELATING TO THE INDIVIDUAL INCOME TAX ACT AND CORPORATE AND
6 FRANCHISE INCOME TAXES; EXTENDING THE TIME PERIOD DURING WHICH THE
7 UTAH HOUSING FINANCE AGENCY MAY ALLOCATE LOW INCOME HOUSING TAX
8 CREDITS; AND MAKING TECHNICAL CHANGES.
9 This act affects sections of Utah Code Annotated 1953 as follows:
10 AMENDS:
11 59-7-607, as enacted by Chapter 251, Laws of Utah 1994
12 59-10-129, as enacted by Chapter 251, Laws of Utah 1994
13 Be it enacted by the Legislature of the state of Utah:
14 Section 1. Section 59-7-607 is amended to read:
15 59-7-607. Utah low-income housing tax credit.
16 (1) As used in this section:
17 (a) "Agency" means the Utah Housing Finance Agency.
18 (b) "Allocation certificate" means:
19 (i) the certificate prescribed by the tax commission and issued by the agency to the
20 taxpayer that specifies the percentage of the annual federal low-income housing tax credit that the
21 taxpayer may take as an annual credit against state income tax; or
22 (ii) a copy of the allocation certificate that the housing sponsor provides to the taxpayer.
23 (c) "Federal low-income housing tax credit" means the credit under Section 42, Internal
24 Revenue Code.
25 (d) "Housing sponsor" means a corporation in the case of a C corporation, a partnership
26 in the case of a partnership, a corporation in the case of an S corporation, or a limited liability
27 company in the case of a limited liability company.

1 (e) "Qualified allocation plan" means the qualified allocation plan adopted by the agency
2 pursuant to Section 42(m), Internal Revenue Code.
3 (f) "Taxpayer" means the person entitled to the tax credit provided under this section
4 which is the corporation in the case of a C corporation, the partners in the case of a partnership,
5 the shareholders in the case of an S corporation, and the members in the case of a limited liability
6 company.
7 (2) (a) For tax years beginning on or after January 1, 1995, there is allowed, a
8 nonrefundable tax credit against taxes otherwise due under this chapter or Chapter 8, for taxpayers
9 issued an allocation certificate.
10 (b) The credit shall be in an amount equal to the amount of federal low-income housing
11 tax credit to which the taxpayer is entitled during that year multiplied by the percentage specified
12 in an allocation certificate issued by the agency.
13 (c) (i) The aggregate annual tax credit which the agency may allocate in each [of] calendar
14 [years 1995, 1996, and 1997] year beginning on or after January 1, 1995, but beginning before
15 January 1, 2001, pursuant to this section and Section 59-10-129 shall be an amount equal to 12.5
16 cents multiplied by the population of Utah for which taxpayers may take each year during the
17 ten-year credit period under Section 42, Internal Revenue Code.
18 (ii) For purposes of this section, the population of Utah shall be determined in accordance
19 with Section 146(j), Internal Revenue Code.
20 (3) By October 1, 1994, the agency shall determine criteria and procedures for allocating
21 the credit under this section and Section 59-10-129 and incorporate the criteria and procedures into
22 the agency's qualified allocation plan. The agency shall create the criteria based on:
23 (a) the number of affordable housing units to be created in Utah for low and moderate
24 income persons in the residential housing development of which the building is a part;
25 (b) the level of area median income being served by the development;
26 (c) the need for the credit for the economic feasibility of the development; and
27 (d) the extended period for which the development commits to remain as affordable
28 housing.
29 (4) (a) Any housing sponsor that has received an allocation of the federal low-income
30 housing tax credit and any applicant for an allocation of the federal low-income housing credit
31 may apply to the agency for a credit under this section.

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1 (b) The agency may not require fees for applications of the credit under this section in
2 addition to those fees required for applications for the federal low-income housing credit.
3 (5) (a) The agency shall determine the amount of the credit to allocate to a qualifying
4 housing sponsor in accordance with the qualified allocation plan of the agency.
5 (b) The agency shall allocate the credit to housing sponsors by issuing an allocation
6 certificate to qualifying housing sponsors. The allocation certificate shall specify the allowed
7 percentage of the federal low-income credit as determined by the agency.
8 (c) The percentage specified in an allocation certificate may not exceed 100% of the
9 federal low-income housing tax credit.
10 (6) If a partnership, an S corporation, or a limited liability company qualifies for the credit
11 provided in this section as a housing sponsor, it shall provide a copy of the allocation certificate
12 to the taxpayers of the entity.
13 (7) A taxpayer shall attach a copy of the allocation certificate to any return upon which a
14 credit is claimed under this section.
15 (8) (a) All elections made by the taxpayer pursuant to Section 42, Internal Revenue Code
16 shall apply to this section.
17 (b) If a taxpayer is required to recapture a portion of any federal low-income housing tax
18 credit, the taxpayer shall also be required to recapture a portion of any state credits authorized by
19 this section. The state recapture amount shall be equal to the percentage of the state credit that
20 equals the proportion the federal recapture amount bears to the original federal low-income
21 housing tax credit amount subject to recapture.
22 (9) (a) Any credits returned to the agency in any year may be reallocated within the same
23 time period as provided in Section 42, Internal Revenue Code.
24 (b) Credits that are unallocated by the agency in any year may be carried over for
25 allocation in the subsequent year.
26 (10) Amounts otherwise qualifying for the credit, but not allowable because the credit
27 exceeds the tax, may be carried back three years or may be carried forward five years as a credit
28 against the tax. Carryover credits shall be applied against the tax before the application of the
29 credits earned in the current year and on a first-earned first-used basis.
30 (11) Any credit taken in this section may be subject to an annual audit by the commission.
31 (12) The agency shall provide an annual report to the Revenue and Taxation Interim

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1 Committee which shall include at least:
2 (a) the purpose and effectiveness of the exemption; and
3 (b) the benefits of the exemption to the state.
4 (13) The tax commission may, in consultation with the agency, promulgate rules to
5 implement this section and Section 59-10-129.
6 Section 2. Section 59-10-129 is amended to read:
7 59-10-129. Utah low-income housing tax credit.
8 (1) As used in this section:
9 (a) "Agency" means the Utah Housing Finance Agency.
10 (b) "Allocation certificate" means:
11 (i) the certificate prescribed by the tax commission and issued by the agency to the
12 taxpayer that specifies the percentage of the annual federal low-income housing tax credit that the
13 taxpayer may take as an annual credit against state income tax; or
14 (ii) a copy of the allocation certificate that the housing sponsor provides to the taxpayer.
15 (c) "Federal low-income housing tax credit" means the credit under Section 42, Internal
16 Revenue Code.
17 (d) "Housing sponsor" means a corporation in the case of a C corporation, a partnership
18 in the case of a partnership, a corporation in the case of an S corporation, or a limited liability
19 company in the case of a limited liability company.
20 (e) "Qualified allocation plan" means the qualified allocation plan adopted by the agency
21 pursuant to Section 42(m), Internal Revenue Code.
22 (f) "Taxpayer" means the person entitled to the tax credit provided under this section
23 which is the corporation in the case of a C corporation, the partners in the case of a partnership,
24 the shareholders in the case of an S corporation, and the members in the case of a limited liability
25 company.
26 (2) (a) For tax years beginning on or after January 1, 1995, there is allowed, a
27 nonrefundable tax credit against taxes otherwise due under this chapter for taxpayers issued an
28 allocation certificate.
29 (b) The credit shall be in an amount equal to the amount of federal low-income housing
30 tax credit to which the taxpayer is entitled during that year multiplied by the percentage specified
31 in an allocation certificate issued by the agency.

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1 (c) (i) The aggregate annual tax credit which the agency may allocate in each [of] calendar
2 [years 1995, 1996, and 1997] year beginning on or after January 1, 1995, but beginning before
3 January 1, 2001, pursuant to this section and Section 59-7-607 shall be an amount equal to 12.5
4 cents multiplied by the population of Utah for which taxpayers may take each year during the
5 ten-year credit period under Section 42, Internal Revenue Code.
6 (ii) For purposes of this section, the population of Utah shall be determined in accordance
7 with Section 146(j), Internal Revenue Code.
8 (3) By October 1, 1994, the agency shall determine criteria and procedures for allocating
9 the credit under this section and Section 59-7-607 and incorporate the criteria and procedures into
10 the agency's qualified allocation plan. The agency shall create the criteria based on:
11 (a) the number of affordable housing units to be created in Utah for low and moderate
12 income persons in the residential housing development of which the building is a part;
13 (b) the level of area median income being served by the development;
14 (c) the need for the credit for the economic feasibility of the development; and
15 (d) the extended period for which the development commits to remain as affordable
16 housing.
17 (4) (a) Any housing sponsor that has received an allocation of the federal low-income
18 housing tax credit and any applicant for an allocation of the federal low-income housing credit
19 may apply to the agency for a credit under this section.
20 (b) The agency may not require fees for applications of the credit under this section in
21 addition to those fees required for applications for the federal low-income housing credit.
22 (5) (a) The agency shall determine the amount of the credit to allocate to a qualifying
23 housing sponsor in accordance with the qualified allocation plan of the agency.
24 (b) The agency shall allocate the credit to housing sponsors by issuing an allocation
25 certificate to qualifying housing sponsors. The allocation certificate shall specify the allowed
26 percentage of the federal low-income credit as determined by the agency.
27 (c) The percentage specified in an allocation certificate may not exceed 100% of the
28 federal low-income housing tax credit.
29 (6) If a partnership, an S corporation, or a limited liability company qualifies for the credit
30 provided in this section as a housing sponsor, it shall provide a copy of the allocation certificate
31 to the taxpayers of the entity.

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1 (7) A taxpayer shall attach a copy of the allocation certificate to any return upon which a
2 credit is claimed under this section.
3 (8) (a) All elections made by the taxpayer pursuant to Section 42, Internal Revenue Code
4 shall apply to this section.
5 (b) If a taxpayer is required to recapture a portion of any federal low-income housing tax
6 credit, the taxpayer shall also be required to recapture a portion of any state credits authorized by
7 this section. The state recapture amount shall be equal to the percentage of the state credit that
8 equals the proportion the federal recapture amount bears to the original federal low-income
9 housing tax credit amount subject to recapture.
10 (9) (a) Any credits returned to the agency in any year may be reallocated within the same
11 time period as provided in Section 42, Internal Revenue Code.
12 (b) Credits that are unallocated by the agency in any year may be carried over for
13 allocation in the subsequent year.
14 (10) Amounts otherwise qualifying for the credit, but not allowable because the credit
15 exceeds the tax, may be carried back three years or may be carried forward five years as a credit
16 against the tax. Carryover credits shall be applied against the tax before the application of the
17 credits earned in the current year and on a first-earned first-used basis.
18 (11) Any credit taken in this section may be subject to an annual audit by the commission.
19 (12) The agency shall provide an annual report to the Revenue and Taxation Interim
20 Committee which shall include at least:
21 (a) the purpose and effectiveness of the exemption; and
22 (b) the benefits of the exemption to the state.




Legislative Review Note
as of 2-13-97 10:03 AM

A limited legal review of this bill raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel

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