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S.B. 198 Enrolled

             1     

ECONOMIC DEVELOPMENT INCENTIVE AMENDMENTS

             2     
2010 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: John L. Valentine

             5     
House Sponsor: Patrick Painter

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill amends the Corporate Franchise and Income Taxes chapter, the Individual
             10      Income Tax Act, and the Economic Development Incentives Act relating to economic
             11      development incentives including tax credits.
             12      Highlighted Provisions:
             13          This bill:
             14          .    enacts and modifies definitions;
             15          .    provides that a local government entity or community development and renewal
             16      agency may claim a refundable economic development tax credit under certain
             17      circumstances;
             18          .    addresses the procedures, requirements, and administration related to the
             19      refundable economic development tax credit and the creation of economic
             20      development zones;
             21          .    addresses reporting requirements by the Governor's Office of Economic
             22      Development;
             23          .    addresses the expenditure of amounts received as a tax credit by a local government
             24      entity or community development and renewal agency;
             25          .    addresses the commingling of tax credit amounts with certain other amounts; and
             26          .    makes technical and conforming changes.
             27      Monies Appropriated in this Bill:
             28          None
             29      Other Special Clauses:


             30          This bill has retrospective operation for a taxable year beginning on or after January 1,
             31      2010.
             32          This bill coordinates with H.B. 24, Economic Development Incentives Act
             33      Amendments, by merging substantive amendments.
             34      Utah Code Sections Affected:
             35      AMENDS:
             36          59-7-614.2, as last amended by Laws of Utah 2009, Chapter 198
             37          59-10-1107, as last amended by Laws of Utah 2009, Chapter 198
             38          63M-1-2403, as enacted by Laws of Utah 2008, Chapter 372
             39          63M-1-2404, as enacted by Laws of Utah 2008, Chapter 372
             40          63M-1-2405, as enacted by Laws of Utah 2008, Chapter 372
             41          63M-1-2407, as enacted by Laws of Utah 2008, Chapter 372
             42          63M-1-2408, as last amended by Laws of Utah 2009, Chapter 183
             43      ENACTS:
             44          63M-1-2409, Utah Code Annotated 1953
             45      Utah Code Sections Affected by Coordination Clause:
             46          63M-1-2405, as enacted by Laws of Utah 2008, Chapter 372
             47     
             48      Be it enacted by the Legislature of the state of Utah:
             49          Section 1. Section 59-7-614.2 is amended to read:
             50           59-7-614.2. Refundable economic development tax credit.
             51          (1) As used in this section:
             52          (a) "Business entity" means a taxpayer that meets the definition of "business entity" as
             53      defined in Section 63M-1-2403 or 63M-1-2803 .
             54          (b) "Community development and renewal agency" is as defined in Section
             55      17C-1-102 .
             56          (c) "Local government entity" is as defined in Section 63M-1-2403 .
             57          [(b)] (d) "Office" means the Governor's Office of Economic Development.


             58          (2) [A] Subject to the other provisions of this section, a business entity, local
             59      government entity, or community development and renewal agency may claim a refundable
             60      tax credit for economic development.
             61          (3) The tax credit under this section is the amount listed as the tax credit amount on
             62      the tax credit certificate that the office issues to the business entity, local government entity, or
             63      community development and renewal agency for the taxable year.
             64          (4) A community development and renewal agency may claim a tax credit under this
             65      section only if a local government entity assigns the tax credit to the community development
             66      and renewal agency in accordance with Section 63M-1-2404 .
             67          [(4)] (5) (a) In accordance with any rules prescribed by the commission under
             68      Subsection [(4)] (5)(b), the commission shall make a refund to the following that claim a tax
             69      credit under this section:
             70          (i) a local government entity;
             71          (ii) a community development and renewal agency; or
             72          (iii) a business entity [that claims a tax credit under this section] if the amount of the
             73      tax credit exceeds the business entity's tax liability for a taxable year.
             74          (b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act,
             75      the commission may make rules providing procedures for making a refund to a business
             76      entity, local government entity, or community development and renewal agency as required by
             77      Subsection [(4)] (5)(a).
             78          [(5)] (6) (a) On or before October 1, 2013, and every five years after October 1, 2013,
             79      the Utah Tax Review Commission shall study the tax credit allowed by this section and make
             80      recommendations to the Revenue and Taxation Interim Committee and the Workforce
             81      Services and Community and Economic Development Interim Committee concerning whether
             82      the tax credit should be continued, modified, or repealed.
             83          (b) For purposes of the study required by this Subsection [(5)] (6), the office shall
             84      provide the following information to the Utah Tax Review Commission:
             85          (i) the amount of tax credit that the office grants to each business entity, local


             86      government entity, or community development and renewal agency for each calendar year;
             87          (ii) the criteria that the office uses in granting a tax credit;
             88          (iii) (A) for a business entity, the new state revenues generated by [each] the business
             89      entity for [each] the calendar year; or
             90          (B) for a local government entity, regardless of whether the local government entity
             91      assigns the tax credit in accordance with Section 63M-1-2404 , the new state revenues
             92      generated as a result of a new commercial project within the local government entity for each
             93      calendar year;
             94          (iv) the information contained in the office's latest report to the Legislature under
             95      Section 63M-1-2406 or 63M-1-2806 ; and
             96          (v) any other information that the Utah Tax Review Commission requests.
             97          (c) The Utah Tax Review Commission shall ensure that its recommendations under
             98      Subsection [(5)] (6)(a) include an evaluation of:
             99          (i) the cost of the tax credit to the state;
             100          (ii) the purpose and effectiveness of the tax credit; and
             101          (iii) the extent to which the state benefits from the tax credit.
             102          Section 2. Section 59-10-1107 is amended to read:
             103           59-10-1107. Refundable economic development tax credit.
             104          (1) As used in this section:
             105          (a) "Business entity" means a claimant, estate, or trust that meets the definition of
             106      "business entity" as defined in Section 63M-1-2403 or 63M-1-2803 .
             107          (b) "Office" means the Governor's Office of Economic Development.
             108          (2) [A] Subject to the other provisions of this section, a business entity may claim a
             109      refundable tax credit for economic development.
             110          (3) The tax credit under this section is the amount listed as the tax credit amount on
             111      the tax credit certificate that the office issues to the business entity for the taxable year.
             112          (4) (a) In accordance with any rules prescribed by the commission under Subsection
             113      (4)(b), the commission shall make a refund to a business entity that claims a tax credit under


             114      this section if the amount of the tax credit exceeds the business entity's tax liability for a
             115      taxable year.
             116          (b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act,
             117      the commission may make rules providing procedures for making a refund to a business entity
             118      as required by Subsection (4)(a).
             119          (5) (a) On or before October 1, 2013, and every five years after October 1, 2013, the
             120      Utah Tax Review Commission shall study the tax credit allowed by this section and make
             121      recommendations to the Revenue and Taxation Interim Committee and the Workforce
             122      Services and Community and Economic Development Interim Committee concerning whether
             123      the tax credit should be continued, modified, or repealed.
             124          (b) For purposes of the study required by this Subsection (5), the office shall provide
             125      the following information to the Utah Tax Review Commission:
             126          (i) the amount of tax credit the office grants to each taxpayer for each calendar year;
             127          (ii) the criteria the office uses in granting a tax credit;
             128          (iii) the new state revenues generated by each taxpayer for each calendar year;
             129          (iv) the information contained in the office's latest report to the Legislature under
             130      Section 63M-1-2406 or 63M-1-2806 ; and
             131          (v) any other information that the Utah Tax Review Commission requests.
             132          (c) The Utah Tax Review Commission shall ensure that its recommendations under
             133      Subsection (5)(a) include an evaluation of:
             134          (i) the cost of the tax credit to the state;
             135          (ii) the purpose and effectiveness of the tax credit; and
             136          (iii) the extent to which the state benefits from the tax credit.
             137          Section 3. Section 63M-1-2403 is amended to read:
             138           63M-1-2403. Definitions.
             139          As used in this part:
             140          (1) "Business entity" means a person that enters into an agreement with the office to
             141      initiate a new commercial project in Utah that will qualify the person to receive a tax credit


             142      under Section 59-7-614.2 or 59-10-1107 .
             143          (2) "Community development and renewal agency" is as defined in Section
             144      17C-1-102 .
             145          [(2)] (3) "Development zone" means an economic development zone created under
             146      Section 63M-1-2404 .
             147          [(3)] (4) "High paying jobs" means:
             148          (a) with respect to a business entity, the annual wages of employment positions in a
             149      business entity that compare favorably against the average wage of a community in which the
             150      employment positions will exist[.];
             151          (b) with respect to a county, the annual wages of employment positions in a new
             152      commercial project within the county that compare favorably against the average wage of the
             153      county in which the employment positions will exist; or
             154          (c) with respect to a city or town, the annual wages of employment positions in a new
             155      commercial project within the city or town that compare favorably against the average wages
             156      of the city or town in which the employment positions will exist.
             157          (5) "Local government entity" means a county, city, or town that enters into an
             158      agreement with the office to have a new commercial project that:
             159          (a) is initiated within the county's, city's, or town's boundaries; and
             160          (b) qualifies the county, city, or town to receive a tax credit under Section 59-7-614.2 .
             161          [(4)] (6) (a) "New commercial project" means an economic development opportunity
             162      that involves new or expanded industrial, manufacturing, distribution, or business services in
             163      Utah.
             164          (b) "New commercial project" does not include retail business.
             165          [(5)] (7) "New incremental jobs" means employment positions that are:
             166          (a) not shifted from one jurisdiction in the state to another jurisdiction in the state; and
             167          (b) (i) with respect to a business entity, created in addition to the baseline count of
             168      employment positions that existed within the business entity before the new commercial
             169      project[.];


             170          (ii) with respect to a county, created as a result of a new commercial project with
             171      respect to which the county or a community development and renewal agency seeks to claim a
             172      tax credit under Section 59-7-614.2 ; or
             173          (iii) with respect to a city or town, created as a result of a new commercial project with
             174      respect to which the city, town, or a community development and renewal agency seeks to
             175      claim a tax credit under Section 59-7-614.2 .
             176          [(6)] (8) "New state revenues" means:
             177          (a) with respect to a business entity:
             178          [(a)] (i) incremental new state sales and use tax revenues that a business entity pays
             179      under Title 59, Chapter 12, Sales and Use Tax Act, as a result of a new commercial project in
             180      a development zone;
             181          [(b)] (ii) incremental new state tax revenues, if any, that a business entity pays as a
             182      result of a new commercial project in a development zone under:
             183          (A) Title 59, Chapter 7, Corporate Franchise and Income Taxes;
             184          [(i)] (B) Title 59, Chapter 10, Part 1, Determination and Reporting of Tax Liability
             185      and Information;
             186          [(ii)] (C) Title 59, Chapter 10, Part 2, Trusts and Estates;
             187          [(iii)] (D) Title 59, Chapter 10, Part 4, Withholding of Tax; or
             188          [(iv) Title 59, Chapter 7, Corporate Franchise and Income Taxes; or]
             189          [(v)] (E) a combination of Subsections [(6)(b)(i) through (iv)] (8)(a)(ii)(A) through
             190      (D);
             191          [(c)] (iii) incremental new state tax revenues paid as individual income taxes under
             192      Title 59, Chapter 10, Part 1, Determination and Reporting of Tax Liability and Information, by
             193      employees of [the] a new or expanded industrial, manufacturing, distribution, or business
             194      service within a new commercial project as evidenced by payroll records that indicate the
             195      amount of employee income taxes withheld and transmitted to the State Tax Commission by
             196      the [business entity] new or expanded industrial, manufacturing, distribution, or business
             197      service within the new commercial project; or


             198          [(d)] (iv) a combination of Subsections [(6)(a) through (c).] (8)(a)(i) through (iii); or
             199          (b) with respect to a local government entity:
             200          (i) incremental new state sales and use tax revenues that are collected under Title 59,
             201      Chapter 12, Sales and Use Tax Act, as a result of a new commercial project in a development
             202      zone;
             203          (ii) incremental new state tax revenues, if any, that are collected as a result of a new
             204      commercial project in a development zone under:
             205          (A) Title 59, Chapter 7, Corporate Franchise and Income Taxes;
             206          (B) Title 59, Chapter 10, Part 1, Determination and Reporting of Tax Liability and
             207      Information;
             208          (C) Title 59, Chapter 10, Part 2, Trusts and Estates;
             209          (D) Title 59, Chapter 10, Part 4, Withholding of Tax; or
             210          (E) a combination of Subsections (8)(b)(ii)(A) through (D);
             211          (iii) incremental new state tax revenues paid as individual income taxes under Title
             212      59, Chapter 10, Part 1, Determination and Reporting of Tax Liability and Information, by
             213      employees of a new or expanded industrial, manufacturing, distribution, or business service
             214      within a new commercial project as evidenced by payroll records that indicate the amount of
             215      employee income taxes withheld and transmitted to the State Tax Commission by the new or
             216      expanded industrial, manufacturing, distribution, or business service within the new
             217      commercial project; or
             218          (iv) a combination of Subsections (8)(b)(i) through (iii).
             219          [(7)] (9) "Office" means the Governor's Office of Economic Development.
             220          [(8)] (10) "Tax credit" means an economic development tax credit created by Section
             221      59-7-614.2 or 59-10-1107 .
             222          [(9)] (11) "Tax credit amount" means the amount the office lists as a tax credit on a
             223      tax credit certificate for a taxable year.
             224          [(10)] (12) "Tax credit certificate" means a certificate issued by the office that:
             225          (a) lists the name of the [applicant] business entity, local government entity, or


             226      community development and renewal agency to which the office authorizes a tax credit;
             227          (b) lists the [applicant's] business entity's, local government entity's, or community
             228      development and renewal agency's taxpayer identification number;
             229          (c) lists the amount of tax credit that the office [awards the applicant] authorizes the
             230      business entity, local government entity, or community development and renewal agency for
             231      the taxable year; and
             232          (d) may include other information as determined by the office.
             233          Section 4. Section 63M-1-2404 is amended to read:
             234           63M-1-2404. Creation of economic development zones -- Tax credits --
             235      Assignment of tax credit.
             236          (1) The office, with advice from the board, may create an economic development zone
             237      in the state that satisfies all of the following requirements:
             238          (a) the area is zoned commercial, industrial, manufacturing, business park, research
             239      park, or other appropriate use in a community-approved master plan; [and]
             240          (b) the request to create a development zone has been forwarded to the office after first
             241      being approved by an appropriate local government entity [that has committed or will commit
             242      to provide local incentives.]; and
             243          (c) local incentives have been committed or will be committed to be provided within
             244      the area.
             245          (2) (a) By following the procedures and requirements of Title 63G, Chapter 3, Utah
             246      Administrative Rulemaking Act, the office shall make rules establishing the conditions that a
             247      business entity [must] or local government entity shall meet to qualify for a tax credit under
             248      this part.
             249          (b) The office shall ensure that [those] the conditions described in Subsection (2)(a)
             250      include the following requirements:
             251          (i) the new commercial project must be within the development zone;
             252          (ii) the new commercial project includes direct investment within the geographic
             253      boundaries of the development zone;


             254          (iii) the new commercial project brings new incremental jobs to Utah;
             255          (iv) the new commercial project includes significant capital investment, the creation of
             256      high paying jobs, or significant purchases from Utah vendors and providers, or any
             257      combination of these three economic factors;
             258          (v) the new commercial project generates new state revenues; and
             259          (vi) [the] (A) a business entity or local government entity qualifying for the tax credit
             260      meets the requirements of Section 63M-1-2405 [.]; or
             261          (B) a community development and renewal agency to which a local government entity
             262      assigns a tax credit under this section meets the requirements of Section 63M-1-2405 .
             263          (3) (a) [The] Subject to the other provisions of this Subsection (3), the office, with
             264      advice from the board, may enter into an agreement with a business entity or local government
             265      entity authorizing a tax credit to [a] the business entity [that] or local government entity if the
             266      business entity or local government entity meets the standards established under Subsection
             267      (2).
             268          (b) (i) With respect to one new commercial project, the office may authorize a tax
             269      credit to a business entity or a local government entity, but not both.
             270          (ii) In determining whether to authorize a tax credit with respect to one new
             271      commercial project to a business entity or a local government entity, the office shall authorize
             272      the tax credit in a manner that the office determines will result in providing the most effective
             273      incentive for the new commercial project.
             274          [(b)] (c) The office may not authorize or commit to authorize a tax credit [to a
             275      business entity] if that tax credit exceeds:
             276          (i) 50% of the new state revenues from the [business entity's] new commercial project
             277      in any given year; or
             278          (ii) 30% of the new state revenues from the [business entity's] new commercial project
             279      over the life of a new commercial project or 20 years, whichever is less.
             280          (d) (i) A local government entity may by resolution assign a tax credit that the office
             281      authorizes to the local government entity to a community development and renewal agency.


             282          (ii) The local government entity shall provide a copy of the resolution described in
             283      Subsection (3)(d)(i) to the office.
             284          (iii) If a local government entity assigns a tax credit to a community development and
             285      renewal agency:
             286          (A) the agreement described in this section shall:
             287          (I) be among the office, the local government entity, and the community development
             288      and renewal agency; and
             289          (II) establish:
             290          (Aa) the obligations of the local government entity and the community development
             291      and renewal agency; and
             292          (Bb) the extent to which any of the local government entity's obligations are
             293      transferred to the community development and renewal agency;
             294          (B) the community development and renewal agency shall retain records as described
             295      in Subsection (4)(d); and
             296          (C) a tax credit certificate issued in accordance with Section 63M-1-2406 shall list the
             297      community development and renewal agency as the name of the applicant.
             298          (4) [The] Subject to Subsection (3), the office shall ensure that the agreement [with the
             299      business entity that is] described in Subsection (3):
             300          (a) details the requirements that the business entity [must] or local government entity
             301      shall meet to qualify for a tax credit under this part;
             302          (b) specifies the maximum amount of tax credit that the business entity [may earn] or
             303      local government entity may be authorized for a taxable year and over the life of the new
             304      commercial project;
             305          (c) establishes the length of time the business entity or local government entity may
             306      claim a tax credit;
             307          (d) requires the business entity or local government entity to retain records supporting
             308      [its] a claim for a tax credit for at least four years after the business entity or local government
             309      entity claims a tax credit under this part; and


             310          (e) requires the business entity or local government entity to submit to audits for
             311      verification of the tax credit claimed.
             312          Section 5. Section 63M-1-2405 is amended to read:
             313           63M-1-2405. Qualifications for tax credit -- Procedure.
             314          (1) The office shall certify a business entity's or local government entity's eligibility
             315      for a tax credit as provided in this section.
             316          (2) A business entity or local government entity seeking to receive a tax credit shall
             317      provide the office with:
             318          (a) an application for a tax credit certificate;
             319          (b) (i) for a business entity, documentation of the new state revenues from the business
             320      entity's new commercial project that were paid during the preceding calendar year; [and] or
             321          (ii) for a local government entity, documentation of the new state revenues from the
             322      new commercial project within the local government entity that were paid during the
             323      preceding calendar year;
             324          (c) if a local government entity seeks to assign the tax credit to a community
             325      development and renewal agency in accordance with Section 63M-1-2404 , a statement
             326      providing the name and taxpayer identification number of the community development and
             327      renewal agency to which the local government entity seeks to assign the tax credit; and
             328          [(c)] (d) (i) with respect to a business entity, a document that expressly directs and
             329      authorizes the State Tax Commission to disclose the business entity's returns and other
             330      information [concerning the business entity] that would otherwise be subject to confidentiality
             331      under Section 59-1-403 or Section 6103, Internal Revenue Code, to the office[.];
             332          (ii) with respect to a local government entity that seeks to claim the tax credit:
             333          (A) a document that expressly directs and authorizes the State Tax Commission to
             334      disclose the local government entity's returns and other information that would otherwise be
             335      subject to confidentiality under Section 59-1-403 or Section 6103, Internal Revenue Code, to
             336      the office; and
             337          (B) if the new state revenues collected as a result of a new commercial project are


             338      attributable in whole or in part to a new or expanded industrial, manufacturing, distribution, or
             339      business service within a new commercial project within the local government, a document
             340      signed by an authorized representative of the new or expanded industrial, manufacturing,
             341      distribution, or business service that:
             342          (I) expressly directs and authorizes the State Tax Commission to disclose the returns
             343      of that new or expanded industrial, manufacturing, distribution, or business service and other
             344      information that would otherwise be subject to confidentiality under Section 59-1-403 or
             345      Section 6103, Internal Revenue Code, to the office; and
             346          (II) lists the taxpayer identification number of that new or expanded industrial,
             347      manufacturing, distribution, or business service; or
             348          (iii) with respect to a local government entity that seeks to assign the tax credit to a
             349      community development and renewal agency:
             350          (A) a document signed by the members of the governing body of the community
             351      development and renewal agency that expressly directs and authorizes the State Tax
             352      Commission to disclose the returns of the community development and renewal agency and
             353      other information that would otherwise be subject to confidentiality under Section 59-1-403 or
             354      Section 6103, Internal Revenue Code, to the office; and
             355          (B) if the new state revenues collected as a result of a new commercial project are
             356      attributable in whole or in part to a new or expanded industrial, manufacturing, distribution, or
             357      business service within a new commercial project within the community development and
             358      renewal agency, a document signed by an authorized representative of the new or expanded
             359      industrial, manufacturing, distribution, or business service that:
             360          (I) expressly directs and authorizes the State Tax Commission to disclose the returns
             361      of that new or expanded industrial, manufacturing, distribution, or business service and other
             362      information that would otherwise be subject to confidentiality under Section 59-1-403 or
             363      Section 6103, Internal Revenue Code, to the office; and
             364          (II) lists the taxpayer identification number of that new or expanded industrial,
             365      manufacturing, distribution, or business service.


             366          (3) (a) The office shall submit the [document] documents described in Subsection
             367      (2)[(c)](d) to the State Tax Commission.
             368          (b) Upon receipt of [the] a document described in Subsection (2)[(c)](d), the State Tax
             369      Commission shall provide the office with the returns and other information requested by the
             370      office that [the business entity directed or authorized] the State Tax Commission is directed or
             371      authorized to provide to the office in [the document described in] accordance with Subsection
             372      (2)[(c)](d).
             373          (4) If, after review of the returns and other information provided by the State Tax
             374      Commission, the office determines that the [documentation provided by the business entity is]
             375      returns and other information are inadequate to provide a reasonable justification for
             376      authorizing a tax credit, the office shall either:
             377          (a) deny the tax credit; or
             378          (b) inform the business entity or local government entity that the [documentation was]
             379      returns or other information were inadequate and ask the business entity or local government
             380      entity to submit new documentation.
             381          (5) If after review of the returns and other information provided by the State Tax
             382      Commission, the office determines that the [documentation] returns and other information
             383      provided by the business entity [provides] or local government entity provide reasonable
             384      justification for authorizing a tax credit, the office shall, based upon the [documentation]
             385      returns and other information:
             386          (a) determine the amount of the tax credit to be granted to the business entity, local
             387      government entity, or if the local government entity assigns the tax credit in accordance with
             388      Section 63M-1-2404 , to the community development and renewal agency to which the local
             389      government entity assigns the tax credit;
             390          (b) issue a tax credit certificate to the business entity, local government entity, or if the
             391      local government entity assigns the tax credit in accordance with Section 63M-1-2404 , to the
             392      community development and renewal agency to which the local government entity assigns the
             393      tax credit; and


             394          (c) provide a duplicate copy of the tax credit certificate to the State Tax Commission.
             395          (6) A business entity, local government entity, or community development and
             396      renewal agency may not claim a tax credit unless the business entity, local government entity,
             397      or community development and renewal agency has a tax credit certificate issued by the office.
             398          (7) (a) A business entity, local government entity, or community development and
             399      renewal agency may claim a tax credit in the amount listed on the tax credit certificate on its
             400      tax return.
             401          (b) A business entity, local government entity, or community development and
             402      renewal agency that claims a tax credit under this section shall retain the tax credit certificate
             403      in accordance with Section 59-7-614.2 or 59-10-1107 .
             404          Section 6. Section 63M-1-2407 is amended to read:
             405           63M-1-2407. Reports of new state revenues, partial rebates, and tax credits.
             406          (1) Before December 1 of each year, the office shall submit a report to the Governor's
             407      Office of Planning and Budget, the Office of Legislative Fiscal Analyst, and the Division of
             408      Finance identifying:
             409          (a) (i) the total estimated amount of new state revenues created from new commercial
             410      projects in the development zones; and
             411          (ii) the estimated amount of new state revenues from new commercial projects in the
             412      development zones that will be generated from:
             413          (A) sales tax;
             414          (B) income tax; and
             415          (C) corporate franchise and income tax;
             416          (b) (i) the total estimated amount of partial rebates as defined in Section 63M-1-2408
             417      that the office projects will be required to be paid in the next fiscal year; and
             418          (ii) the estimated amount of partial rebates as defined in Section 63M-1-2408 that are
             419      attributable to:
             420          (A) sales tax;
             421          (B) income tax; and


             422          (C) corporate franchise and income tax; and
             423          (c) the total estimated amount of tax credits that the office projects that business
             424      entities, local government entities, or community development and renewal agencies will
             425      qualify to claim under this part.
             426          (2) By the first business day of each month, the office shall submit a report to the
             427      Governor's Office of Planning and Budget, the Office of Legislative Fiscal Analyst, and the
             428      Division of Finance identifying:
             429          (a) each new agreement entered into by the office since the last report;
             430          (b) the estimated amount of new state revenues that will be generated under each
             431      agreement; and
             432          (c) the estimated amount of tax credits that a business entity, local government entity,
             433      or community development and renewal agency could qualify for under each agreement.
             434          Section 7. Section 63M-1-2408 is amended to read:
             435           63M-1-2408. Transition clause -- Modification of agreements -- Payment of
             436      partial rebates -- Economic Incentive Restricted Account.
             437          (1) As used in this section, "partial rebate" means an agreement between the office and
             438      a business entity under which the state agrees to pay back to the business entity a portion of
             439      new state revenues generated by a business entity's new commercial project.
             440          (2) (a) Unless modified or renegotiated as provided in Subsection (2)(b), the Division
             441      of Finance shall make partial rebate payments due under agreements entered into by the office
             442      before May 5, 2008 as provided in this section.
             443          (b) By January 1, 2009, the office shall:
             444          (i) contact each business entity with whom the office entered into an agreement under
             445      former Section 63M-1-1304 or 63M-1-1704 ; and
             446          (ii) subject to the limits established in Subsection 63M-1-2404 (3)[(b)](c), seek to
             447      modify those agreements for the sole purpose of providing the incentives in the form of tax
             448      credits under this part rather than partial rebates.
             449          (c) The office shall:


             450          (i) for each modified agreement granting tax credits, follow the procedures and
             451      requirements of Section 63M-1-2405 ;
             452          (ii) for each agreement that still requires the state to pay partial rebates to the business
             453      entity, follow the procedures and requirements of this section; and
             454          (iii) provide a report to the Executive Appropriations Committee and the Legislative
             455      Fiscal Analyst by December 1, 2008, about the progress of its efforts to modify agreements
             456      reached before May 5, 2008.
             457          (3) (a) There is created a restricted account in the General Fund known as the
             458      Economic Incentive Restricted Account.
             459          (b) The account shall consist of monies transferred into the account by the Division of
             460      Finance from the General Fund as provided in this section.
             461          (c) The Division of Finance shall make payments from the account as required by this
             462      section.
             463          (4) (a) Each business entity seeking a partial rebate shall follow the procedures and
             464      requirements of this Subsection (4) to obtain a partial rebate.
             465          (b) Within 90 days of the end of each calendar year, a business entity seeking a partial
             466      rebate shall:
             467          (i) provide the office with documentation of the new state revenues that the business
             468      entity generated during the preceding calendar year; and
             469          (ii) ensure that the documentation includes:
             470          (A) the types of taxes and corresponding amounts of taxes paid directly to the State
             471      Tax Commission; and
             472          (B) the sales taxes paid to Utah vendors and suppliers that were indirectly paid to the
             473      State Tax Commission.
             474          (c) The office shall:
             475          (i) audit or review the documentation for accuracy;
             476          (ii) based upon its analysis of the documentation, determine the amount of partial
             477      rebates that the business entity earned under the agreement; and


             478          (iii) submit to the Division of Finance:
             479          (A) a request for payment of partial rebates to the business entity;
             480          (B) the name and address of the payee; and
             481          (C) any other information requested by the Division of Finance.
             482          (5) Upon receipt of a request for payment of partial rebates from the office, the
             483      Division of Finance shall:
             484          (a) transfer from the General Fund to the restricted account the amount contained in
             485      the request for payment of partial rebates after reducing the amount transferred by any
             486      unencumbered balances in the restricted account; and
             487          (b) notwithstanding Subsections 51-5-3 (23)(b) and 63J-1-104 (3)(b), after receiving a
             488      request for payment of partial rebates and making the transfer required by Subsection (5)(a),
             489      the Division of Finance shall pay the partial rebates from the account.
             490          Section 8. Section 63M-1-2409 is enacted to read:
             491          63M-1-2409. Expenditure of amounts received by a local government entity or
             492      community development and renewal agency as a tax credit -- Commingling of tax credit
             493      amounts with certain other amounts.
             494          (1) Subject to Subsections (2) and (3), a local government entity or community
             495      development and renewal agency may expend amounts the local government entity or
             496      community development and renewal agency receives as a tax credit under Section
             497      59-7-614.2 :
             498          (a) for infrastructure, including real property or personal property, if that infrastructure
             499      is related to the new commercial project with respect to which the local government entity or
             500      community development and renewal agency claims the tax credit under Section 59-7-614.2 ;
             501      or
             502          (b) for another economic development purpose related to the new commercial project
             503      with respect to which the local government entity or community development and renewal
             504      agency claims the tax credit under Section 59-7-614.2 .
             505          (2) A local government entity may:


             506          (a) commingle amounts the local government entity receives as a tax credit under
             507      Section 59-7-614.2 with amounts the local government entity receives under Title 63M,
             508      Chapter 1, Part 9, Industrial Assistance Fund; and
             509          (b) expend the commingled amounts described in Subsection (2)(a) for a purpose
             510      described in Title 63M, Chapter 1, Part 9, Industrial Assistance Fund, if that purpose is related
             511      to the new commercial project with respect to which the local government entity claims the tax
             512      credit under Section 59-7-614.2 .
             513          (3) A community development and renewal agency may:
             514          (a) commingle amounts the community development and renewal agency receives as a
             515      tax credit under Section 59-7-614.2 with amounts the community development and renewal
             516      agency receives under Title 17C, Chapter 1, Part 4, Tax Increment and Sales Tax; and
             517          (b) expend the commingled amounts described in Subsection (3)(a) for a purpose
             518      described in Title 17C, Chapter 1, Part 4, Tax Increment and Sales Tax, if that purpose is
             519      related to the new commercial project with respect to which the community development and
             520      renewal agency claims the tax credit under Section 59-7-614.2 .
             521          Section 9. Retrospective operation.
             522          This bill has retrospective operation for a taxable year beginning on or after January 1,
             523      2010.
             524          Section 10. Coordinating S.B. 198 with H.B. 24 -- Merging substantive
             525      amendments.
             526          If this S.B. 198 and H.B. 24, Economic Development Incentives Act Amendments,
             527      both pass, it is the intent of the Legislature that the Office of Legislative Research and General
             528      Counsel, in preparing the Utah Code database for publication, modify Subsection
             529      63M-1-2405(2) to read:
             530          "(2) A business entity or local government entity seeking to receive a tax credit shall
             531      provide the office with:
             532          (a) an application for a tax credit certificate;
             533          (b) (i) for a business entity, documentation of the new state revenues from the business


             534      entity's new commercial project that were paid during the preceding calendar year; [and] or
             535          (ii) for a local government entity, documentation of the new state revenues from the
             536      new commercial project within the local government entity that were paid during the
             537      preceding calendar year;
             538          (c) if a local government entity seeks to assign the tax credit to a community
             539      development and renewal agency in accordance with Section 63M-1-2404 , a statement
             540      providing the name and taxpayer identification number of the community development and
             541      renewal agency to which the local government entity seeks to assign the tax credit;
             542          [(c)] (d) (i) with respect to a business entity, a document that expressly directs and
             543      authorizes the State Tax Commission to disclose the business entity's returns and other
             544      information [concerning the business entity] that would otherwise be subject to confidentiality
             545      under Section 59-1-403 or Section 6103, Internal Revenue Code, to the office[.];
             546          (ii) with respect to a local government entity that seeks to claim the tax credit:
             547          (A) a document that expressly directs and authorizes the State Tax Commission to
             548      disclose the local government entity's returns and other information that would otherwise be
             549      subject to confidentiality under Section 59-1-403 or Section 6103, Internal Revenue Code, to
             550      the office; and
             551          (B) if the new state revenues collected as a result of a new commercial project are
             552      attributable in whole or in part to a new or expanded industrial, manufacturing, distribution, or
             553      business service within a new commercial project within the local government, a document
             554      signed by an authorized representative of the new or expanded industrial, manufacturing,
             555      distribution, or business service that:
             556          (I) expressly directs and authorizes the State Tax Commission to disclose the returns
             557      of that new or expanded industrial, manufacturing, distribution, or business service and other
             558      information that would otherwise be subject to confidentiality under Section 59-1-403 or
             559      Section 6103, Internal Revenue Code, to the office; and
             560          (II) lists the taxpayer identification number of that new or expanded industrial,
             561      manufacturing, distribution, or business service; or


             562          (iii) with respect to a local government entity that seeks to assign the tax credit to a
             563      community development and renewal agency:
             564          (A) a document signed by the members of the governing body of the community
             565      development and renewal agency that expressly directs and authorizes the State Tax
             566      Commission to disclose the returns of the community development and renewal agency and
             567      other information that would otherwise be subject to confidentiality under Section 59-1-403 or
             568      Section 6103, Internal Revenue Code, to the office; and
             569          (B) if the new state revenues collected as a result of a new commercial project are
             570      attributable in whole or in part to a new or expanded industrial, manufacturing, distribution, or
             571      business service within a new commercial project within the community development and
             572      renewal agency, a document signed by an authorized representative of the new or expanded
             573      industrial, manufacturing, distribution, or business service that:
             574          (I) expressly directs and authorizes the State Tax Commission to disclose the returns
             575      of that new or expanded industrial, manufacturing, distribution, or business service and other
             576      information that would otherwise be subject to confidentiality under Section 59-1-403 or
             577      Section 6103, Internal Revenue Code, to the office; and
             578          (II) lists the taxpayer identification number of that new or expanded industrial,
             579      manufacturing, distribution, or business service; and
             580          (e) for a business entity only, documentation that the business entity has satisfied the
             581      performance benchmarks outlined in the agreement described in Subsection
             582      63M-1-2404 (3)(a), including:
             583          (i) significant capital investment;
             584          (ii) the creation of high paying jobs;
             585          (iii) significant purchases from Utah vendors and providers; or
             586          (iv) any combination of Subsections (2)(e)(i), (ii), and (iii)."


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