Third Substitute S.B. 27

Senator Howard A. Stephenson proposes to substitute the following bill:

1 INDIVIDUAL INCOME TAX AND CORPORATE FRANCHISE AND
2 INCOME TAX CREDITS FOR MINING ESTABLISHMENTS
3 2001 GENERAL SESSION
4 STATE OF UTAH
5 Sponsor: Howard A. Stephenson
6 Mike Dmitrich
L. Steven Poulton

7 This act modifies the Individual Income Tax Act and Corporate Franchise and Income Taxes
8 to enact refundable tax credits for the purchase of certain machinery or equipment
9 purchased by a mining establishment. The act grants rulemaking authority to the State Tax
10 Commission. This act takes effect for taxable years beginning on or after January 1, 2002.
11 This act affects sections of Utah Code Annotated 1953 as follows:
12 ENACTS:
13 59-7-604.1, Utah Code Annotated 1953
14 59-10-133, Utah Code Annotated 1953
15 Be it enacted by the Legislature of the state of Utah:
16 Section 1. Section 59-7-604.1 is enacted to read:
17 59-7-604.1. Refundable credit for machinery or equipment purchased by a mining
18 establishment -- Definitions -- Rulemaking authority.
19 (1) As used in this section:
20 (a) "credit amount" means S THE PRODUCT OF:
20a (i) s the amount of state sales and use tax under Subsection
21 59-12-103 (2)(a)(i) paid during a taxable year by a mining establishment for machinery or
22 equipment or the use of machinery or equipment in a transaction involving a:
23 S [ (i) ] (A) s purchase; or
24 S [ (ii) ] (B) s lease; S AND
24a S (ii) (A) 30% FOR THE TAXABLE YEAR BEGINNING ON OR AFTER JANUARY 1, 2002, s

24b S BUT BEGINNING ON OR BEFORE DECEMBER 31, 2002;
24c (B) 60% FOR THE TAXABLE YEAR BEGINNING ON OR AFTER JANUARY 1, 2003, BUT
24d BEGINNING ON OR BEFORE DECEMBER 31, 2003; AND
24e (C) 100% FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY 1, 2004; s

25 (b) "machinery or equipment" means:
26 (i) machinery;
27 (ii) equipment; or
28 (iii) a part for:
29 (A) machinery; or
30 (B) equipment;
31 (c) S (i) EXCEPT AS PROVIDED IN SUBSECTION (1)(c)(ii) , s "mining establishment" means
31-1a an establishment described in S h [ [ ] Sector 21, Mining [ ] ]
31a [ SUBSECTOR 212, MINING EXCEPT OIL AND GA S ] h s , of
32 NAICS; and
32a S (ii) NOTWITHSTANDING SUBSECTION (1)(c)(i), "MINING ESTABLISHMENT" DOES
32b NOT INCLUDE AN ESTABLISHMENT DESCRIBED IN INDUSTRY GROUP 2122, METAL ORE MINING,
32c OF NAICS; AN D s
33 (d) "NAICS" means the 1997 North American Industry Classification System of the
34 federal Executive Office of the President, Office of Management and Budget.
35 (2) For taxable years beginning on or after January 1, 2002, and subject to Subsection (3),
36 a mining establishment may claim a refundable credit against the S [ tax ] TAXES s imposed by this
36a chapter in
37 an amount equal to the credit amount for machinery or equipment:
38 (a) that the mining establishment purchases or leases during the taxable year;
39 (b) for which the mining establishment paid a tax during the taxable year under Section
40 59-12-103 ;
41 (c) that is used in a mining process; and
42 (d) that has an economic life of three or more years.
43 (3) A mining establishment may not carry forward or carry back a credit authorized by this
44 section.
45 (4) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
46 commission shall make rules defining the terms:
47 (a) "equipment";
48 (b) "establishment";
49 (c) "machinery"; and
50 (d) "mining process."
51 Section 2. Section 59-10-133 is enacted to read:
52 59-10-133. Refundable credit for machinery or equipment purchased by a mining
53 establishment -- Definitions -- Rulemaking authority.
54 (1) As used in this section:
55 (a) "credit amount" means S THE PRODUCT OF:
55a (i ) s the amount of state sales and use tax under Subsection

56 59-12-103 (2)(a)(i) paid during a taxable year by a mining establishment for machinery or
57 equipment or the use of machinery or equipment in a transaction involving a:
58 S [ (i) ] (A) s purchase; or
59 S [ (ii) ] (B) s lease; S AND
59a S (ii) (A) 30% FOR THE TAXABLE YEAR BEGINNING ON OR AFTER JANUARY 1, 2002, BUT
59b BEGINNING ON OR BEFORE DECEMBER 31, 2002;
59c (B) 60% FOR THE TAXABLE YEAR BEGINNING ON OR AFTER JANUARY 1, 2003, BUT
59d BEGINNING ON OR BEFORE DECEMBER 31, 2003; AND
59e (C) 100% FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY 1, 2004; s
60 (b) "machinery or equipment" means:
61 (i) machinery;
62 (ii) equipment; or
63 (iii) a part for:
64 (A) machinery; or
65 (B) equipment;
66 (c) S (i) EXCEPT AS PROVIDED IN SUBSECTION (1)(c)(ii), s "mining establishment" means an
66-1a establishment described in S h [ [ ] Sector 21, Mining [ ] ]
66a [ SUBSECTOR 212, MINING EXCEPT OIL AND GAS ] h s , of
67 NAICS; and
67a S (ii) NOTWITHSTANDING SUBSECTION (1)(c)(i), "MINING ESTABLISHMENT" DOES NOT INCLUDE AN
67b ESTABLISHMENT DESCRIBED IN INDUSTRY GROUP 2122, METAL ORE MINING, OF NAICS; AN D s
68 (d) "NAICS" means the 1997 North American Industry Classification System of the
69 federal Executive Office of the President, Office of Management and Budget.
70 (2) For taxable years beginning on or after January 1, 2002, and subject to Subsection (3),
71 a mining establishment may claim a refundable credit against the S [ tax ] TAXES s imposed by this
71a chapter in
72 an amount equal to the credit amount for machinery or equipment:
73 (a) that the mining establishment purchases or leases during the taxable year;
74 (b) for which the mining establishment paid a tax during the taxable year under Section
75 59-12-103 ;
76 (c) that is used in a mining process; and
77 (d) that has an economic life of three or more years.
78 (3) A mining establishment may not carry forward or carry back a credit authorized by this
79 section.
80 (4) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
81 commission shall make rules defining the terms:
82 (a) "equipment";
83 (b) "establishment";
84 (c) "machinery"; and
85 (d) "mining process."
86 Section 3. Effective date.


87 This act takes effect for taxable years beginning on or after January 1, 2002.