H.B. 309 Enrolled

INDIVIDUAL AND CORPORATE INCOME TAX
CREDITS FOR LOW-INCOME HOUSING
1999 GENERAL SESSION
STATE OF UTAH
Sponsor: David M. Jones
Gordon E. Snow

AN ACT RELATING TO REVENUE AND TAXATION; MODIFYING THE CORPORATE
AND INDIVIDUAL LOW-INCOME HOUSING TAX CREDITS; MAKING TECHNICAL
CHANGES; AND PROVIDING AN EFFECTIVE DATE.
This act affects sections of Utah Code Annotated 1953 as follows:
AMENDS:
59-7-607, as last amended by Chapter 134, Laws of Utah 1997
59-10-129, as last amended by Chapter 134, Laws of Utah 1997
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 59-7-607 is amended to read:
59-7-607. Utah low-income housing tax credit.
(1) As used in this section:
(a) "Agency" means the Utah Housing Finance Agency.
(b) "Allocation certificate" means:
(i) the certificate prescribed by the tax commission and issued by the agency to [the] each
taxpayer that specifies the percentage of the annual federal low-income housing tax credit that
[the] each taxpayer may take as an annual credit against state income tax; or
(ii) a copy of the allocation certificate that the housing sponsor provides to the taxpayer.
(c) "Building" means a qualified low-income building as defined in Section 42(c), Internal
Revenue Code.
[(c)] (d) "Federal low-income housing tax credit" means the credit under Section 42,
Internal Revenue Code.
[(d)] (e) "Housing sponsor" means a corporation in the case of a C corporation, a
partnership in the case of a partnership, a corporation in the case of an S corporation, or a limited

liability company in the case of a limited liability company.
[(e)] (f) "Qualified allocation plan" means the qualified allocation plan adopted by the
agency pursuant to Section 42(m), Internal Revenue Code.
(g) "Special low-income housing tax credit certificate" means a certificate:
(i) prescribed by the tax commission;
(ii) that a housing sponsor issues to a taxpayer for a taxable year; and
(iii) that specifies the amount of credit a taxpayer may claim under this section if the
taxpayer meets the requirements of this section.
[(f)] (h) "Taxpayer" means the person entitled to the tax credit provided under this section
which is the corporation in the case of a C corporation, the partners in the case of a partnership, the
shareholders in the case of an S corporation, and the members in the case of a limited liability
company.
(2) (a) For tax years beginning on or after January 1, 1995, there is allowed, a nonrefundable
tax credit against taxes otherwise due under this chapter or Chapter 8, for taxpayers issued an
allocation certificate.
(b) The credit shall be in an amount equal to the greater of the amount of:
(i) federal low-income housing tax credit to which the taxpayer is entitled during that year
multiplied by the percentage specified in an allocation certificate issued by the agency; or
(ii) credit specified in the special low-income housing tax credit certificate that the housing
sponsor issues to the taxpayer as provided in Subsection (2)(c).
(c) For purposes of Subsection (2)(b)(ii), the credit is equal to the product of:
(i) the total amount of low-income housing tax credit under this section that:
(A) a housing sponsor is allowed for a building; and
(B) all of the taxpayers may claim with respect to the building if the taxpayers meet the
requirements of this section; and
(ii) the percentage of credit a taxpayer may claim:
(A) under this section if the taxpayer meets the requirements of this section; and
(B) as provided in the agreement between the taxpayer and the housing sponsor.

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[(c)] (d) (i) The aggregate annual tax credit which the agency may allocate in each of
calendar years 1995 through 2000 pursuant to this section and Section 59-10-129 shall be an amount
equal to 12.5 cents multiplied by the population of Utah for which taxpayers may take each year
during the ten-year credit period under Section 42, Internal Revenue Code.
(ii) For purposes of this section, the population of Utah shall be determined in accordance
with Section 146(j), Internal Revenue Code.
(3) (a) By October 1, 1994, the agency shall determine criteria and procedures for allocating
the credit under this section and Section 59-10-129 and incorporate the criteria and procedures into
the agency's qualified allocation plan.
(b) The agency shall create the criteria under Subsection (3)(a) based on:
[(a)] (i) the number of affordable housing units to be created in Utah for low and moderate
income persons in the residential housing development of which the building is a part;
[(b)] (ii) the level of area median income being served by the development;
[(c)] (iii) the need for the credit for the economic feasibility of the development; and
[(d)] (iv) the extended period for which the development commits to remain as affordable
housing.
(4) (a) Any housing sponsor that has received an allocation of the federal low-income
housing tax credit and any applicant for an allocation of the federal low-income housing credit may
apply to the agency for a credit under this section.
(b) The agency may not require fees for applications of the credit under this section in
addition to those fees required for applications for the federal low-income housing credit.
(5) (a) The agency shall determine the amount of the credit to allocate to a qualifying
housing sponsor in accordance with the qualified allocation plan of the agency.
(b) (i) The agency shall allocate the credit to housing sponsors by issuing an allocation
certificate to qualifying housing sponsors.
(ii) The allocation certificate under Subsection (5)(b)(i) shall specify the allowed percentage
of the federal low-income credit as determined by the agency.
(c) The percentage specified in an allocation certificate may not exceed 100% of the federal

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

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(13) The tax commission may, in consultation with the agency, promulgate rules to
implement this section and Section 59-10-129 .
Section 2. Section 59-10-129 is amended to read:
59-10-129. Utah low-income housing tax credit.
(1) As used in this section:
(a) "Agency" means the Utah Housing Finance Agency.
(b) "Allocation certificate" means:
(i) the certificate prescribed by the tax commission and issued by the agency to [the] each
taxpayer that specifies the percentage of the annual federal low-income housing tax credit that [the]
each taxpayer may take as an annual credit against state income tax; or
(ii) a copy of the allocation certificate that the housing sponsor provides to the taxpayer.
(c) "Building" means a qualified low-income building as defined in Section 42(c), Internal
Revenue Code.
[(c)] (d) "Federal low-income housing tax credit" means the credit under Section 42, Internal
Revenue Code.
[(d)] (e) "Housing sponsor" means a corporation in the case of a C corporation, a partnership
in the case of a partnership, a corporation in the case of an S corporation, or a limited liability
company in the case of a limited liability company.
[(e)] (f) "Qualified allocation plan" means the qualified allocation plan adopted by the
agency pursuant to Section 42(m), Internal Revenue Code.
(g) "Special low-income housing tax credit certificate" means a certificate:
(i) prescribed by the tax commission;
(ii) that a housing sponsor issues to a taxpayer for a taxable year; and
(iii) that specifies the amount of a credit a taxpayer may claim under this section if the
taxpayer meets the requirements of this section.
[(f)] (h) "Taxpayer" means the person entitled to the tax credit provided under this section
which is the corporation in the case of a C corporation, the partners in the case of a partnership, the
shareholders in the case of an S corporation, and the members in the case of a limited liability

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company.
(2) (a) For tax years beginning on or after January 1, 1995, there is allowed, a nonrefundable
tax credit against taxes otherwise due under this chapter for taxpayers issued an allocation certificate.
(b) The credit shall be in an amount equal to the greater of the amount of:
(i) federal low-income housing tax credit to which the taxpayer is entitled during that year
multiplied by the percentage specified in an allocation certificate issued by the agency; or
(ii) credit specified in the special low-income housing tax credit certificate that the housing
sponsor issues to the taxpayer as provided in Subsection (2)(c).
(c) For purposes of Subsection (2)(b)(ii), the credit is equal to the product of:
(i) the total amount of low-income housing tax credit under this section that:
(A) a housing sponsor is allowed for a building; and
(B) all of the taxpayers may claim with respect to the building if the taxpayers meet the
requirements of this section; and
(ii) the percentage of credit a taxpayer may claim:
(A) under this section if the taxpayer meets the requirements of this section; and
(B) as provided in the agreement between the taxpayer and the housing sponsor.
[(c)] (d) (i) The aggregate annual tax credit which the agency may allocate in each of
calendar years 1995 through 2000 pursuant to this section and Section 59-7-607 shall be an amount
equal to 12.5 cents multiplied by the population of Utah for which taxpayers may take each year
during the ten-year credit period under Section 42, Internal Revenue Code.
(ii) For purposes of this section, the population of Utah shall be determined in accordance
with Section 146(j), Internal Revenue Code.
(3) (a) By October 1, 1994, the agency shall determine criteria and procedures for allocating
the credit under this section and Section 59-7-607 and incorporate the criteria and procedures into
the agency's qualified allocation plan.
(b) The agency shall create the criteria under Subsection (3)(a) based on:
[(a)] (i) the number of affordable housing units to be created in Utah for low and moderate
income persons in the residential housing development of which the building is a part;

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[(b)] (ii) the level of area median income being served by the development;
[(c)] (iii) the need for the credit for the economic feasibility of the development; and
[(d)] (iv) the extended period for which the development commits to remain as affordable
housing.
(4) (a) Any housing sponsor that has received an allocation of the federal low-income
housing tax credit and any applicant for an allocation of the federal low-income housing credit may
apply to the agency for a credit under this section.
(b) The agency may not require fees for applications of the credit under this section in
addition to those fees required for applications for the federal low-income housing credit.
(5) (a) The agency shall determine the amount of the credit to allocate to a qualifying
housing sponsor in accordance with the qualified allocation plan of the agency.
(b) (i) The agency shall allocate the credit to housing sponsors by issuing an allocation
certificate to qualifying housing sponsors.
(ii) The allocation certificate under Subsection (5)(b)(i) shall specify the allowed percentage
of the federal low-income credit as determined by the agency.
(c) The percentage specified in an allocation certificate may not exceed 100% of the federal
low-income housing tax credit.
(6) If a partnership, an S corporation, or a limited liability company qualifies for the credit
provided in this section as a housing sponsor, it shall provide a copy of the allocation certificate to
the taxpayers of the entity.
(7) A taxpayer shall attach a copy of the allocation certificate to any return upon which a
credit is claimed under this section.
(8) (a) All elections made by the taxpayer pursuant to Section 42, Internal Revenue Code,
shall apply to this section.
(b) (i) If a taxpayer is required to recapture a portion of any federal low-income housing tax
credit, the taxpayer shall also be required to recapture a portion of any state credits authorized by this
section.
(ii) The state recapture amount shall be equal to the percentage of the state credit that equals

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the proportion the federal recapture amount bears to the original federal low-income housing tax
credit amount subject to recapture.
(9) (a) Any credits returned to the agency in any year may be reallocated within the same
time period as provided in Section 42, Internal Revenue Code.
(b) Credits that are unallocated by the agency in any year may be carried over for allocation
in the subsequent year.
(10) (a) Amounts otherwise qualifying for the credit, but not allowable because the credit
exceeds the tax, may be carried back three years or may be carried forward five years as a credit
against the tax.
(b) Carryover credits under Subsection (10)(a) shall be applied against the tax before the
application of the credits earned in the current year and on a first-earned first-used basis.
(11) Any credit taken in this section may be subject to an annual audit by the commission.
(12) The agency shall provide an annual report to the Revenue and Taxation Interim
Committee which shall include at least:
(a) the purpose and effectiveness of the exemption; and
(b) the benefits of the exemption to the state.
Section 3. Effective date.
This act takes effect for taxable years beginning on or after January 1, 2000.

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