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H.B. 52 Enrolled

             1     

RESEARCH ACTIVITIES TAX CREDITS

             2     
AMENDMENTS

             3     
2008 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Chief Sponsor: John Dougall

             6     
Senate Sponsor: Wayne L. Niederhauser

             7      Cosponsors:
             8      Roger E. Barrus
             9      Greg J. Curtis
             10      Craig A. Frank
             11      Kevin S. Garn
             12      Wayne A. HarperBrad King
Todd E. Kiser
Bradley G. Last
Michael T. Morley
Carol Spackman MossMerlynn T. Newbold
Michael E. Noel
Curtis Oda
Aaron Tilton
Carl Wimmer              13     
             14      LONG TITLE
             15      General Description:
             16          This bill amends the Corporate Franchise and Income Taxes chapter and the Individual
             17      Income Tax Act to address tax credits for research activities.
             18      Highlighted Provisions:
             19          This bill:
             20          .    modifies tax credit percentages;
             21          .    addresses the taxable year for which certain tax credits for research activities may be
             22      claimed;
             23          .    addresses Utah Tax Review Commission study requirements for the tax credits; and
             24          .    makes technical changes.
             25      Monies Appropriated in this Bill:
             26          None
             27      Other Special Clauses:
             28          This bill has retrospective operation for taxable years beginning on or after January 1,
             29      2008.
             30      Utah Code Sections Affected:


             31      AMENDS:
             32          59-7-612, as last amended by Laws of Utah 2007, Chapter 288
             33          59-7-613, as last amended by Laws of Utah 1999, Chapter 59
             34          59-10-1012, as last amended by Laws of Utah 2007, Chapter 288
             35          59-10-1013, as renumbered and amended by Laws of Utah 2006, Chapter 223
             36     
             37      Be it enacted by the Legislature of the state of Utah:
             38          Section 1. Section 59-7-612 is amended to read:
             39           59-7-612. Tax credits for research activities conducted in the state -- Carry
             40      forward -- Commission to report modification or repeal of certain federal provisions --
             41      Utah Tax Review Commission study.
             42          (1) (a) A taxpayer meeting the requirements of this section may claim the following
             43      nonrefundable tax credits:
             44          (i) a research tax credit of [7%] 5% of the taxpayer's qualified research expenses for the
             45      current taxable year that exceed the base amount provided for under Subsection (4);
             46          (ii) a tax credit for [payments] a payment to a qualified [organizations] organization for
             47      basic research as provided in Section 41(e), Internal Revenue Code, of [7%] 5% for the current
             48      taxable year that exceed the base amount provided for under Subsection (4); and
             49          (iii) a tax credit equal to:
             50          (A) for the taxable year beginning on or after January 1, 2008, but beginning on or
             51      before December 31, 2008, 5% of the taxpayer's qualified research expenses for the current
             52      taxable year[.];
             53          (B) for the taxable year beginning on or after January 1, 2009, but beginning on or
             54      before December 31, 2009, 6.3% of the taxpayer's qualified research expenses for the current
             55      taxable year; or
             56          (C) for taxable years beginning on or after January 1, 2010, 9.2% of the taxpayer's
             57      qualified research expenses for the current taxable year.
             58          [(b) (i) Except as provided in Subsection (1)(b)(ii), a taxpayer may:]


             59          [(A) claim the tax credit or a portion of the tax credit for the taxable year immediately
             60      following the taxable year for which the taxpayer qualifies for the tax credit;]
             61          [(B) carry forward the tax credit or a portion of the tax credit as provided in Subsection
             62      (5); or]
             63          [(C) claim a portion of the tax credit and carry forward a portion of the tax credit as
             64      provided in Subsections (1)(b)(i)(A) and (B).]
             65          [(ii) A taxpayer may not carry forward the tax credit allowed by Subsection (1)(a)(iii).]
             66          (b) Subject to Subsection (5), a taxpayer may claim a tax credit under:
             67          (i) Subsection (1)(a)(i) or (1)(a)(iii), for the taxable year for which the taxpayer incurs
             68      the qualified research expenses; or
             69          (ii) Subsection (1)(a)(ii), for the taxable year for which the taxpayer makes the payment
             70      to the qualified organization.
             71          (c) The tax credits provided for in this section do not include the alternative incremental
             72      credit provided for in Section 41(c)(4), Internal Revenue Code.
             73          (2) For purposes of claiming a tax credit under this section, a unitary group as defined
             74      in Section 59-7-101 is considered to be one taxpayer.
             75          (3) Except as specifically provided for in this section:
             76          (a) the tax credits authorized under Subsection (1) shall be calculated as provided in
             77      Section 41, Internal Revenue Code; and
             78          (b) the definitions provided in Section 41, Internal Revenue Code, apply in calculating
             79      the tax credits authorized under Subsection (1).
             80          (4) For purposes of this section:
             81          (a) the base amount shall be calculated as provided in Sections 41(c) and 41(h), Internal
             82      Revenue Code, except that:
             83          (i) the base amount does not include the calculation of the alternative incremental credit
             84      provided for in Section 41(c)(4), Internal Revenue Code;
             85          (ii) a taxpayer's gross receipts include only those gross receipts attributable to sources
             86      within this state as provided in Part 3, Allocation and Apportionment of Income -- Utah


             87      UDITPA Provisions; and
             88          (iii) notwithstanding Section 41(c), Internal Revenue Code, for purposes of calculating
             89      the base amount, a taxpayer:
             90          (A) may elect to be treated as a start-up company as provided in Section 41(c)(3)(B)
             91      regardless of whether the taxpayer meets the requirements of Section 41(c)(3)(B)(i)(I) or (II);
             92      and
             93          (B) may not revoke an election to be treated as a start-up company under Subsection
             94      (4)(a)(iii)(A);
             95          (b) "basic research" is as defined in Section 41(e)(7), Internal Revenue Code, except
             96      that the term includes only basic research conducted in this state;
             97          (c) "qualified research" is as defined in Section 41(d), Internal Revenue Code, except
             98      that the term includes only qualified research conducted in this state;
             99          (d) "qualified research expenses" is as defined and calculated in Section 41(b), Internal
             100      Revenue Code, except that the term includes only:
             101          (i) in-house research expenses incurred in this state; and
             102          (ii) contract research expenses incurred in this state; and
             103          (e) a tax credit provided for in this section is not terminated if a credit terminates under
             104      Section 41, Internal Revenue Code.
             105          (5) (a) If the amount of a tax credit claimed by a taxpayer under Subsection (1)(a)(i) or
             106      (ii) exceeds the taxpayer's tax liability under this chapter for a taxable year, the amount of the
             107      tax credit exceeding the tax liability:
             108          [(a)] (i) may be carried forward for a period that does not exceed the next 14 taxable
             109      years; and
             110          [(b)] (ii) may not be carried back to a taxable year preceding the current taxable year.
             111          (b) A taxpayer may not carry forward the tax credit allowed by Subsection (1)(a)(iii).
             112          (6) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             113      commission may make rules for purposes of this section prescribing a certification process for
             114      qualified organizations to ensure that amounts paid to the qualified organizations are for basic


             115      research conducted in this state.
             116          (7) If a provision of Section 41, Internal Revenue Code, is modified or repealed, the
             117      commission shall report the modification or repeal to the Utah Tax Review Commission within
             118      60 days after the day on which the modification or repeal becomes effective.
             119          (8) (a) The Utah Tax Review Commission shall review the tax credits provided for in
             120      this section on or before October 1 of the year after the year in which the commission reports
             121      under Subsection (7) a modification or repeal of a provision of Section 41, Internal Revenue
             122      Code.
             123          (b) Notwithstanding Subsection (8)(a), the Utah Tax Review Commission is not
             124      required to review the tax credits provided for in this section if the only modification to a
             125      provision of Section 41, Internal Revenue Code, is the extension of the termination date
             126      provided for in Section 41(h), Internal Revenue Code.
             127          (c) The Utah Tax Review Commission shall address in a review under this section:
             128          (i) the cost of the tax credits provided for in this section;
             129          (ii) the purpose and effectiveness of the tax credits provided for in this section;
             130          (iii) whether the tax credits provided for in this section benefit the state; and
             131          (iv) whether the tax credits provided for in this section should be:
             132          (A) continued;
             133          (B) modified; or
             134          (C) repealed.
             135          (d) If the Utah Tax Review Commission reviews the tax credits provided for in this
             136      section, the Utah Tax Review Commission shall report its findings to the Revenue and Taxation
             137      Interim Committee on or before the November interim meeting of the year in which the Utah
             138      Tax Review Commission reviews the tax credits.
             139          Section 2. Section 59-7-613 is amended to read:
             140           59-7-613. Tax credits for machinery, equipment, or both primarily used for
             141      conducting qualified research or basic research -- Carry forward -- Commission to report
             142      modification or repeal of certain federal provisions -- Utah Tax Review Commission


             143      study.
             144          (1) As used in this section:
             145          (a) "Basic research" is as defined in Section 41(e)(7), Internal Revenue Code, except
             146      that the term includes only basic research conducted in this state.
             147          (b) "Equipment" includes:
             148          (i) [computers] a computer;
             149          (ii) computer equipment; and
             150          (iii) computer software.
             151          (c) "Purchase price":
             152          (i) includes the cost of installing an item of machinery or equipment; and
             153          (ii) does not include [sales or use taxes] a tax imposed under Chapter 12, Sales and Use
             154      Tax Act, on an item of machinery or equipment.
             155          (d) "Qualified organization" is as defined in Section 41(e)(6), Internal Revenue Code.
             156          (e) "Qualified research" is as defined in Section 41(d), Internal Revenue Code, except
             157      that the term includes only qualified research conducted in this state.
             158          (2) (a) Except as provided in Subsection (2)(c), for taxable years beginning on or after
             159      January 1, 1999, but beginning before December 31, 2010, a taxpayer [shall qualify for] meeting
             160      the requirements of this section may claim the following nonrefundable tax credits [for the
             161      taxable year in which the machinery, equipment, or both, meets the requirements of either
             162      Subsection (2)(a)(i) or (2)(a)(ii)]:
             163          (i) a tax credit of 6% of the purchase price of [either] machinery, equipment, or both:
             164          (A) purchased by the taxpayer during the taxable year;
             165          (B) that is [not exempt from sales or use taxes] subject to a tax under Chapter 12, Sales
             166      and Use Tax Act; and
             167          (C) that is primarily used to conduct qualified research in this state; and
             168          (ii) a tax credit of 6% of the purchase price of [either] machinery, equipment, or both:
             169          (A) purchased by the taxpayer during the taxable year;
             170          (B) that is [not exempt from sales or use taxes] subject to a tax under Chapter 12, Sales


             171      and Use Tax Act;
             172          (C) that is donated to a qualified organization; and
             173          (D) that is primarily used to conduct basic research in this state.
             174          [(b) If a taxpayer qualifying for a credit under Subsection (2)(a) seeks to claim the
             175      credit, the taxpayer shall:]
             176          [(i) claim the credit or a portion of the credit for the taxable year immediately following
             177      the taxable year for which the taxpayer qualifies for the credit;]
             178          [(ii) carry the credit or a portion of the credit forward as provided in Subsection (5); or]
             179          [(iii) claim a portion of the credit and carry forward a portion of the credit as provided
             180      in Subsections (2)(b)(i) and (ii).]
             181          [(c) Notwithstanding Subsection (2)(a), if]
             182          (b) Subject to Subsection (5), a taxpayer may claim a tax credit under this section for
             183      the taxable year for which the taxpayer purchases the machinery, equipment, or both.
             184          (c) If a taxpayer qualifies for a tax credit under Subsection (2)(a) for a purchase of
             185      machinery, equipment, or both, the taxpayer may not claim the tax credit or carry the tax credit
             186      forward if the machinery, equipment, or both, is primarily used to conduct qualified research in
             187      the state for a time period that is less than 12 consecutive months.
             188          (3) For purposes of claiming a tax credit under this section, a unitary group as defined
             189      in Section 59-7-101 is considered to be one taxpayer.
             190          (4) Notwithstanding [the provisions of] Section 41(h), Internal Revenue Code, [the
             191      credits] a tax credit provided for in this section [shall not terminate if the credits terminate] is
             192      not terminated if a credit terminates under Section 41, Internal Revenue Code.
             193          (5) [Notwithstanding the provisions of Sections 39 and 41(g), Internal Revenue Code,
             194      governing the carry forward and carry back of federal tax credits, if] If the amount of a tax
             195      credit claimed by a taxpayer under this section exceeds the taxpayer's tax liability under this
             196      chapter for a taxable year, the amount of the tax credit exceeding the tax liability:
             197          (a) may be carried forward for a period that does not exceed the next 14 taxable years;
             198      and


             199          (b) may not be carried back to a taxable year preceding the current taxable year.
             200          (6) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             201      commission may make rules for purposes of this section prescribing a certification process for
             202      qualified organizations to ensure that [either] machinery, equipment, or both provided to the
             203      qualified organization is to be primarily used to conduct basic research in this state.
             204          (7) If a [federal tax credit under] provision of Section 41, Internal Revenue Code, is
             205      modified or repealed, the commission shall report the modification or repeal to the Utah Tax
             206      Review Commission within 60 days after the day on which the modification or repeal becomes
             207      effective.
             208          (8) (a) [Except as provided in Subsection (8)(b), the] The Utah Tax Review
             209      Commission shall review the tax credits provided for in this section on or before [the earlier of:
             210      (i)] October 1 of the year after the year in which the commission reports under Subsection (7) a
             211      modification or repeal of a [federal tax credit under] provision of Section 41, Internal Revenue
             212      Code[; or].
             213          [(ii) October 1, 2004.]
             214          (b) Notwithstanding Subsection (8)(a), the Utah Tax Review Commission is not
             215      required to review the tax credits provided for in this section if the only modification to a
             216      [federal tax credit under] provision of Section 41, Internal Revenue Code, is the extension of
             217      the termination date provided for in Section 41(h), Internal Revenue Code.
             218          (c) The Utah Tax Review Commission shall address in a review under this section the:
             219          (i) cost of the [credit] tax credits provided for in this section;
             220          (ii) purpose and effectiveness of the [credit] tax credits provided for in this section;
             221          (iii) whether the [credit benefits] tax credits provided for in this section benefit the state;
             222      and
             223          (iv) whether the [credit] tax credits provided for in this section should be:
             224          (A) continued;
             225          (B) modified; or
             226          (C) repealed.


             227          (d) If the Utah Tax Review Commission reviews the tax credits provided for in this
             228      section, the Utah Tax Review Commission shall report its findings to the Revenue and Taxation
             229      Interim Committee on or before the November interim meeting of the year in which the Utah
             230      Tax Review Commission reviews the tax credits.
             231          Section 3. Section 59-10-1012 is amended to read:
             232           59-10-1012. Tax credits for research activities conducted in the state -- Carry
             233      forward -- Commission to report modification or repeal of certain federal provisions --
             234      Utah Tax Review Commission study.
             235          (1) (a) A claimant, estate, or trust meeting the requirements of this section may claim
             236      the following nonrefundable tax credits:
             237          (i) a research tax credit of [7%] 5% of the claimant's, estate's, or trust's qualified
             238      research expenses for the current taxable year that exceed the base amount provided for under
             239      Subsection (3);
             240          (ii) a tax credit for [payments] a payment to a qualified [organizations] organization for
             241      basic research as provided in Section 41(e), Internal Revenue Code of [7%] 5% for the current
             242      taxable year that exceed the base amount provided for under Subsection (3); and
             243          (iii) a tax credit equal to:
             244          (A) for the taxable year beginning on or after January 1, 2008, but beginning on or
             245      before December 31, 2008, 5% of the claimant's, estate's, or trust's qualified research expenses
             246      for the current taxable year[.];
             247          (B) for the taxable year beginning on or after January 1, 2009, but beginning on or
             248      before December 31, 2009, 6.3% of the claimant's, estate's, or trust's qualified research
             249      expenses for the current taxable year; or
             250          (C) for taxable years beginning on or after January 1, 2010, 9.2% of the claimant's,
             251      estate's, or trust's qualified research expenses for the current taxable year.
             252          [(b) (i) Except as provided in Subsection (1)(b)(ii), a claimant, estate, or trust may:]
             253          [(A) claim the tax credit or a portion of the tax credit for the taxable year immediately
             254      following the taxable year for which the claimant, estate, or trust qualifies for the tax credit;]


             255          [(B) carry forward the tax credit or a portion of the tax credit as provided in Subsection
             256      (4); or]
             257          [(C) claim a portion of the tax credit and carry forward a portion of the tax credit as
             258      provided in Subsections (1)(b)(i)(A) and (B).]
             259          [(ii) A claimant, estate, or trust may not carry forward the tax credit allowed by
             260      Subsection (1)(a)(iii).]
             261          (b) Subject to Subsection (4), a claimant, estate, or trust may claim a tax credit under:
             262          (i) Subsection (1)(a)(i) or (1)(a)(iii), for the taxable year for which the claimant, estate,
             263      or trust incurs the qualified research expenses; or
             264          (ii) Subsection (1)(a)(ii), for the taxable year for which the claimant, estate, or trust
             265      makes the payment to the qualified organization.
             266          (c) The tax credits provided for in this section do not include the alternative incremental
             267      credit provided for in Section 41(c)(4), Internal Revenue Code.
             268          (2) Except as specifically provided for in this section:
             269          (a) the tax credits authorized under Subsection (1) shall be calculated as provided in
             270      Section 41, Internal Revenue Code; and
             271          (b) the definitions provided in Section 41, Internal Revenue Code, apply in calculating
             272      the tax credits authorized under Subsection (1).
             273          (3) For purposes of this section:
             274          (a) the base amount shall be calculated as provided in Sections 41(c) and 41(h), Internal
             275      Revenue Code, except that:
             276          (i) the base amount does not include the calculation of the alternative incremental credit
             277      provided for in Section 41(c)(4), Internal Revenue Code;
             278          (ii) a claimant's, estate's, or trust's gross receipts include only those gross receipts
             279      attributable to sources within this state as provided in Section 59-10-118 ; and
             280          (iii) notwithstanding Section 41(c), Internal Revenue Code, for purposes of calculating
             281      the base amount, a claimant, estate, or trust:
             282          (A) may elect to be treated as a start-up company as provided in Section 41(c)(3)(B)


             283      regardless of whether the claimant, estate, or trust meets the requirements of Section
             284      41(c)(3)(B)(i)(I) or (II); and
             285          (B) may not revoke an election to be treated as a start-up company under Subsection
             286      (3)(a)(iii)(A);
             287          (b) "basic research" is as defined in Section 41(e)(7), Internal Revenue Code, except
             288      that the term includes only basic research conducted in this state;
             289          (c) "qualified research" is as defined in Section 41(d), Internal Revenue Code, except
             290      that the term includes only qualified research conducted in this state;
             291          (d) "qualified research expenses" is as defined and calculated in Section 41(b), Internal
             292      Revenue Code, except that the term includes only:
             293          (i) in-house research expenses incurred in this state; and
             294          (ii) contract research expenses incurred in this state; and
             295          (e) a tax credit provided for in this section is not terminated if a credit terminates under
             296      Section 41, Internal Revenue Code.
             297          (4) (a) If the amount of a tax credit claimed by a claimant, estate, or trust under
             298      Subsection (1)(a)(i) or (ii) exceeds the claimant's, estate's, or trust's tax liability under this
             299      chapter for a taxable year, the amount of the tax credit exceeding the tax liability:
             300          [(a)] (i) may be carried forward for a period that does not exceed the next 14 taxable
             301      years; and
             302          [(b)] (ii) may not be carried back to a taxable year preceding the current taxable year.
             303          (b) A claimant, estate, or trust may not carry forward the tax credit allowed by
             304      Subsection (1)(a)(iii).
             305          (5) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             306      commission may make rules for purposes of this section prescribing a certification process for
             307      qualified organizations to ensure that amounts paid to the qualified organizations are for basic
             308      research conducted in this state.
             309          (6) If a provision of Section 41, Internal Revenue Code, is modified or repealed, the
             310      commission shall report the modification or repeal to the Utah Tax Review Commission within


             311      60 days after the day on which the modification or repeal becomes effective.
             312          (7) (a) The Utah Tax Review Commission shall review the tax credits provided for in
             313      this section on or before October 1 of the year after the year in which the commission reports
             314      under Subsection (6) a modification or repeal of a provision of Section 41, Internal Revenue
             315      Code.
             316          (b) Notwithstanding Subsection (7)(a), the Utah Tax Review Commission is not
             317      required to review the tax credits provided for in this section if the only modification to a
             318      provision of Section 41, Internal Revenue Code, is the extension of the termination date
             319      provided for in Section 41(h), Internal Revenue Code.
             320          (c) The Utah Tax Review Commission shall address in a review under this section:
             321          (i) the cost of the tax credits provided for in this section;
             322          (ii) the purpose and effectiveness of the tax credits provided for in this section;
             323          (iii) whether the tax credits provided for in this section benefit the state; and
             324          (iv) whether the tax credits provided for in this section should be:
             325          (A) continued;
             326          (B) modified; or
             327          (C) repealed.
             328          (d) If the Utah Tax Review Commission reviews the tax credits provided for in this
             329      section, the Utah Tax Review Commission shall report its findings to the Revenue and Taxation
             330      Interim Committee on or before the November interim meeting of the year in which the Utah
             331      Tax Review Commission reviews the tax credits.
             332          Section 4. Section 59-10-1013 is amended to read:
             333           59-10-1013. Tax credits for machinery, equipment, or both primarily used for
             334      conducting qualified research or basic research -- Carry forward -- Commission to report
             335      modification or repeal of certain federal provisions -- Utah Tax Review Commission
             336      study.
             337          (1) As used in this section:
             338          (a) "Basic research" is as defined in Section 41(e)(7), Internal Revenue Code, except


             339      that the term includes only basic research conducted in this state.
             340          (b) "Equipment" includes:
             341          (i) [computers] a computer;
             342          (ii) computer equipment; and
             343          (iii) computer software.
             344          (c) "Purchase price":
             345          (i) includes the cost of installing an item of machinery or equipment; and
             346          (ii) does not include [sales or use taxes] a tax imposed under Chapter 12, Sales and Use
             347      Tax Act, on an item of machinery or equipment.
             348          (d) "Qualified organization" is as defined in Section 41(e)(6), Internal Revenue Code.
             349          (e) "Qualified research" is as defined in Section 41(d), Internal Revenue Code, except
             350      that the term includes only qualified research conducted in this state.
             351          (2) (a) Except as provided in Subsection (2)(c), for taxable years beginning on or after
             352      January 1, 1999, but beginning before December 31, 2010, a claimant, estate, or trust [shall
             353      qualify for] meeting the requirements of this section may claim the following nonrefundable tax
             354      credits [for the taxable year in which the machinery, equipment, or both, meets the requirements
             355      of either Subsection (2)(a)(i) or (2)(a)(ii)]:
             356          (i) a tax credit of 6% of the purchase price of [either] machinery, equipment, or both:
             357          (A) purchased by the claimant, estate, or trust during the taxable year;
             358          (B) that is [not exempt from sales or use taxes] subject to a tax under Chapter 12, Sales
             359      and Use Tax Act; and
             360          (C) that is primarily used to conduct qualified research in this state; and
             361          (ii) a tax credit of 6% of the purchase price paid by the claimant, estate, or trust for
             362      [either] machinery, equipment, or both:
             363          (A) purchased by the claimant, estate, or trust during the taxable year;
             364          (B) that is [not exempt from sales or use taxes] subject to a tax under Chapter 12, Sales
             365      and Use Tax Act;
             366          (C) that is donated to a qualified organization; and


             367          (D) that is primarily used to conduct basic research in this state.
             368          [(b) If a claimant, estate, or trust qualifying for a tax credit under Subsection (2)(a)
             369      seeks to claim the tax credit, the claimant, estate, or trust shall:]
             370          [(i) claim the tax credit or a portion of the tax credit for the taxable year immediately
             371      following the taxable year for which the claimant, estate, or trust qualifies for the tax credit;]
             372          [(ii) carry the tax credit or a portion of the tax credit forward as provided in Subsection
             373      (5); or]
             374          [(iii) claim a portion of the tax credit and carry forward a portion of the tax credit as
             375      provided in Subsections (2)(b)(i) and (ii).]
             376          [(c) Notwithstanding Subsection (2)(a), if]
             377          (b) Subject to Subsection (4), a claimant, estate, or trust may claim a tax credit under
             378      this section for the taxable year for which the claimant, estate, or trust purchases the machinery,
             379      equipment, or both.
             380          (c) If a claimant, estate, or trust qualifies for a tax credit under Subsection (2)(a) for a
             381      purchase of machinery, equipment, or both, the claimant, estate, or trust may not claim the tax
             382      credit or carry the tax credit forward if the machinery, equipment, or both, is primarily used to
             383      conduct qualified research in the state for a time period that is less than 12 consecutive months.
             384          [(3) For purposes of claiming a tax credit under this section, a unitary group as defined
             385      in Section 59-7-101 is considered to be one claimant.]
             386          [(4)] (3) Notwithstanding [the provisions of] Section 41(h), Internal Revenue Code,
             387      [the tax credits] a tax credit provided for in this section [shall not terminate if the credits
             388      terminate] is not terminated if a credit terminates under Section 41, Internal Revenue Code.
             389          [(5)] (4) [Notwithstanding the provisions of Sections 39 and 41(g), Internal Revenue
             390      Code, governing the carry forward and carry back of federal tax credits, if] If the amount of a
             391      tax credit claimed by a claimant, estate, or trust under this section exceeds a claimant's, estate's,
             392      or trust's tax liability under this chapter for a taxable year, the amount of the tax credit
             393      exceeding the tax liability:
             394          (a) may be carried forward for a period that does not exceed the next 14 taxable years;


             395      and
             396          (b) may not be carried back to a taxable year preceding the current taxable year.
             397          [(6)] (5) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking
             398      Act, the commission may make rules for purposes of this section prescribing a certification
             399      process for qualified organizations to ensure that [either] machinery, equipment, or both
             400      provided to the qualified organization is to be primarily used to conduct basic research in this
             401      state.
             402          [(7)] (6) If a [federal credit under] provision of Section 41, Internal Revenue Code, is
             403      modified or repealed, the commission shall report the modification or repeal to the Utah Tax
             404      Review Commission within 60 days after the day on which the modification or repeal becomes
             405      effective.
             406          (7) (a) The Utah Tax Review Commission shall review the tax credits provided for in
             407      this section on or before October 1 of the year after the year in which the commission reports
             408      under Subsection (6) a modification or repeal of a provision of Section 41, Internal Revenue
             409      Code.
             410          (b) Notwithstanding Subsection (7)(a), the Utah Tax Review Commission is not
             411      required to review the tax credits provided for in this section if the only modification to a
             412      provision of Section 41, Internal Revenue Code, is the extension of the termination date
             413      provided for in Section 41(h), Internal Revenue Code.
             414          (c) The Utah Tax Review Commission shall address in a review under this section the:
             415          (i) cost of the tax credits provided for in this section;
             416          (ii) purpose and effectiveness of the tax credits provided for in this section;
             417          (iii) whether the tax credits provided for in this section benefit the state; and
             418          (iv) whether the tax credits provided for in this section should be:
             419          (A) continued;
             420          (B) modified; or
             421          (C) repealed.
             422          (d) If the Utah Tax Review Commission reviews the tax credits provided for in this


             423      section, the Utah Tax Review Commission shall report its findings to the Revenue and Taxation
             424      Interim Committee on or before the November interim meeting of the year in which the Utah
             425      Tax Review Commission reviews the tax credits.
             426          Section 5. Retrospective operation.
             427          This bill has retrospective operation for taxable years beginning on or after January 1,
             428      2008.


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